Mumbai: India’s car sales will accelerate this fiscal year as economic growth helps the country withstand a global slump in automobile demand, an industry group said, spurring Maruti Suzuki India Ltd to increase investment.
“Car sales are forecast to grow at least 10% in the year to March, double an April estimate for a 5% expansion,” Dilip Chenoy, director general of the Society of Indian Automobile Manufacturers, said in an interview in New Delhi on Friday.
The 13 car makers in the country sold 1.22 million cars last fiscal year. Maruti Suzuki, maker of half the cars sold in the country, said it’s planning investments and Honda Motor Co. Ltd is boosting output to meet growing demand. General
Higher gear: A Maruti Suzuki showroom in New Delhi. Indian car makers sold 1.22 million cars last fiscal. Ramesh Pathania / Mint
Motors Co. and Toyota Motor Corp. are among car makers increasing bets on India, China and other emerging markets as sales in the US, Japan and Europe fall.
“Sentiments have improved and pent-up demand is coming back,” Chenoy said. “Interest rates now are better than before and the stimulus package by the government has also helped.”
Indian economic growth may accelerate to as much as 7.8% this year as the US economy shows signs of “bottoming out” and harvests benefit from monsoon rains, the finance ministry had said on 2 July.
China, Japan, and the US are among countries offering a mix of credits, tax breaks and subsidies to boost auto sales by getting consumers to trade-in old cars for newer, more fuel efficient models.
The Reserve Bank of India injected about Rs5.6 trillion into the economy, which together with the government fiscal stimulus amounted to nearly 12% of the gross domestic product. The central bank kept borrowing costs unchanged in its last monetary policy statement on 28 July.
Car sales in India gained 1.3% in the fiscal year ended in March, the slowest pace in at least seven years. Sales may reach three million units a year by 2015, helped by new models such as the Tata Nano, the world’s cheapest car, and higher incomes for the nation’s 50 million middle-class population, according to a 2006 government forecast.
Osamu Suzuki, chairman of Suzuki Motor Corp., will be in New Delhi in September to discuss a plan to expand facilities, Maruti Suzuki chairman R.C. Bhargava said.
Honda, Japan’s second largest auto maker, will increase production in India by 50% starting next month to 7,500 units, Jnaneswar Sen, vicepresident in charge of marketing at Honda’s India unit, said.
“The economic growth is still very good, the stock market is better and job recruitments are happening,” Sen said.