Fitch expects the Indian automobile sector to log around 10-12 per cent growth rate during 2010. In its latest research report on the Indian auto sector, Fitch Ratings expects faster recovery in the passenger vehicle segment, which it predicts will grow 12-14 per cent, as against 5-6 per cent growth in the commercial vehicle segment.

"Although domestic sales volumes are expected to recover, exports may continue to be an area of concern - due to the slowdown in global automotive markets and the expiry of scrappage incentives for replacing older vehicles (offered in 2009)," the report noted. Sales of passenger vehicles began to improve from June last year, and commercial vehicles from October. The rebound in passenger vehicles has been supported by an improving liquidity scenario and restoration of consumer confidence, the report said.

According to it, modest growth in industrial production and government stimulus has brought about stability in commercial vehicle sales, though at lower levels. Fitch said the improving industrial production and economic growth rates, coupled with a reversal of more than two years of downtrend, are likely to spur a positive track for commercial vehicles manufacturers in 2010. However, growth trends have distinctly varied as light commercial vehicle segment to maintain its ground, while the medium and heavy commercial vehicle sector felt the heat due to the decline in industrial output.