The Hindu Business Line : NCAER survey pegs car demand growth at 8 pc

DEMAND for passenger cars in India is slated to grow at a compounded annual rate of growth (CARG) of eight per cent till 2011-12. According to a study undertaken by the National Council of Applied Economic Research (NCAER), the demand for passenger cars will grow from 6,13,000 units in 2002-03 to 12,27,000 units in 2011-12.

The bulk of the demand will be coming from the northern and central region. Demand in this region is set to grow from 2,57,000 units in 2002-03 to 5,24,000 units in 2011-12.

Meanwhile, the western region will see the highest projected CARG of 9.1 per cent, while the projected CARG at 5.4 per cent is the lowest in the East.

Interestingly, multi utility vehicles (MUVs) will see a higher CARG (nine per cent) than passenger cars, and will be giving active competition to the passenger cars segment in India.

The total demand for MUVs is projected to grow from 1,30,000 units in 2002-03 to 2,82,000 units in 2011-12. While, the CARG at 9.7 per cent is projected to be the highest in the west, the eastern region will see the lowest CARG (of 7.4 per cent) for MUVs.

Meanwhile, among two-wheelers, motorcycles will continue to lead and maintain a healthy growth, with a CARG of 14 per cent.

Total demand for motorcycles is set to increase from 32,70,000 units in 2002-03 to 1,06,69,000 units in 2011-12. Again, it is the western region that has recorded the highest CARG of 16.8 per cent.

According to the survey, in respect of motorcycles, the projected CARG is high on account of high elasticity of demand with respect to income.

Scooters meanwhile, though not clocking a negative growth rate, will see marginal growth in demand from 8,76,000 units in 2002-03 to 11,24,000 units in 2011-12.

The CARG between this time-period for scooters would only be about 2.8 per cent.

However, the survey points out that the repositioning of scooters being employed by several manufacturers will help prevent negative growth in the category.

"The traditional scooter companies are attempting to strategically reposition the scooter through design changes aimed at the youth market. The days of conventional scooter design are over as observed in the two most scooter friendly countries, i.e., Japan and Italy. Keeping these changes in view, one can expect a modest growth rate of 3.1 per cent in the future as against negative growth rate witnessed in the past", the survey says.

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