New Delhi: Indian car sales should pick up helped by coming festive season demand after they climbed for a sixth successive month in July, propelled by new launches and a revival in bank financing, industry and analysts said on Monday.
Improving outlook: A Maruti Suzuki showroom in New Delhi. The car maker reported a 33.4% jump in July sales. Ramesh Pathania / Mint
Car sales are a leading gauge of consumer sentiment in India in the absence of other indices, and the country is one of the few markets in the world where demand has been picking up.
Data from the Society of Indian Automobile Manufacturers (Siam) showed companies sold 115,067 cars during July, 31% more than the 87,901 cars a year earlier.
“Unlike last year, banks are willing to lend now and there is a return in customer demand, which will grow sales,” said Ashish Nigam, analyst with Antique Stock Broking Ltd.
“There could be some effect because of the bad monsoons this year, but I think that would be only temporary. With the new launches, there are more urban buyers and I see demand for vehicles being sustained,” he said.
Vehicle sales get a boost during the festival season, which starts from the last week of September, when many families like to make big purchases. An industry official said dealers had already started stocking for the festive season.
“I think some dispatches are happening because this time Diwali is coming early,” said Dilip Chenoy, director general of Siam, referring to the festival of lights in October.
Automobile stocks have been among the major gainers this year on the back of improving outlook for the sector.
Leader utility vehicle and tractor maker Mahindra and Mahindra Ltd (M&M) has more than trebled this year and top car maker Maruti Suzuki India Ltd has rallied 148%, outpacing the Bombay Stock Exchange index that has risen 57% over the same period.
Maruti, in which Japan’s Suzuki Motor Corp. has a 54% stake, reported a 33.4% jump in July sales on strong demand for its Swift model and A-Star exports.
Its profit in the June quarter had unexpectedly leapt a quarter from a year earlier, helped by a fall in commodity prices and lower costs.
Sanjiv Duggal, who runs the world’s biggest India fund, managing at least $4 billion (Rs19,120 crore) at HSBC, said last week automobile and property were set to benefit from India’s stimulus measures to boost growth.
Car sales had registered their first fall in three years last year in July and fell in five out of the last six months of 2008 as the rising cost of financing purchases and higher prices crimped demand.
On average, July sales for Maruti, Tata, M&M and Hyundai Motor India have risen by about one-third, according to Reuters calculations.
Sales of trucks and buses, a barometer of economic activity, rose 9.6% from a year earlier to 37,624 units, their first rise since July last year, the Siam data showed, helped by sales of light commercial vehicles.
But sales of medium and heavy trucks and buses were still falling.
Motorcycle sales rose 19.5% to 546,245 units from a year ago.