New Transportation research report from Business Monitor International is now available from Fast Market Research

Boston, MA -- (SBWire) -- 07/03/2013 --Despite the current gloom, we remain bullish on Indian auto sales going into FY2013/14. With Indian companies having run down their inventory in the past few months, there has already been an uptick in investment spending recently as inventories are rebuilt. Even though we do not expect further monetary easing measures from the central bank for the rest of the year, the recent rate cuts since the beginning of 2013, will provide a nice tailwind for passenger car sales in the coming months with consumer loan credit becoming more readily available. Also, if inflation falls further, consumer sentiment will improve as well.

With a slightly better than expected performance in March 2013, we are downgrading our FY2013/14 auto sales forecast slightly, due to base effects. We now forecast passenger vehicle sales to grow 4.0%, from 4.9% previously, to hit 2.8mn units and CV sales to grow 7.0%, from 8.0% previously, to hit 850,000 units. This will then bring our full FY2013/14 auto sales forecast to 3.65mn units, up 4.7% y-o-y.

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While SUV sales growth will slow down due to higher taxes in the latest budget, as well as moderation from previously phenomenal growth rates, we still expect the segment to be an outperformer.

Although the passenger car market contracted for the first time in a decade, with the exception of BMW, most luxury automakers are enjoying good Q1 growth, defying the broader slowdown in the car market. We expect motorbike sales growth to pick up in FY2013/14 and forecast sales to grow 8.3%, to 15mn units. The recent rate cut on May 3 is likely to ease consumer credit, which will see motorbike sales benefitting from cheaper loan availability.

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