New-vehicle sales look set to slump

Domestic passenger car sales are expected to slow in the second half as several popular models were launched in the first six months. Sales of commercial vehicles will also remain poor.

This implies vehicle sales growth of just 3 per cent for the whole year, compared to the first-half pace of 10 per cent, the securities house

said.

However, exports should do better than expected, climbing 17 per cent to 810,000 units, as Tisco Securities was encouraged by the shipping out of 320,880 locally assembled vehicles in the first five months, mainly passenger cars.

"We maintain our forecast for total vehicle production of 1.46 million units, up 15 per cent, with higher exports expected to offset lower domestic sales," it said.

Weaker-than-expected domestic car sales and rising costs of raw materials, mainly steel and plastics, were the risk factors for the forecast.

Total vehicle production from January-May was 588,640 units, up 21 per cent year on year.

Last month, auto-makers reported a 6-per-cent drop in domestic sales to 50,108 units, marking the first monthly decline this year. The sharp rise in global oil prices and inflation as well as the unstable political situation are believed to be the chief causes.

In the month, sales of commercial vehicles, mostly pickups, slumped by 21 per cent year on year and 12 per cent month on month. This was attributed mainly to a 50-per-cent jump in the price of diesel from the previous artificially low levels and the surge in inflation.

The impact on passenger cars has not been as dramatic, with newly released models such as the Honda Jazz and Accord and the Toyota Altis supporting sales.