New Delhi: Car sales in India rose for a third straight month in April, helped by lower borrowing costs, rural demand and the government’s stimulus measures, but industry officials said a lasting recovery was still distant.
Data from the Society of Indian Automobile Manufacturers (SIAM) released on Monday showed automakers sold 102,899 cars in April, 4.2% higher than a year earlier. Car sales had slid for four months, before starting to rise in February.
Emerging markets like China, India, Russia and South America are seen as long-term growth markets for global automakers, but job losses and wage cuts in the wake of the financial crisis along with tight financing conditions have dampened vehicle sales in India since mid-2008.
India cut factory gate taxes and the Reserve Bank of India slashed its key lending rate by 4.25 percentage points since last October to 4.75% to revive demand, but an industry official said more government measures were needed to sustain the sales momentum.
”We have to be careful before saying there are signs of revival. The fundamentals are still weak,” said Sugato Sen, a senior director at SIAM.
”In the next few months, unless further positive policy intervention is there, things will not improve.”
The industry body has forecast passenger vehicle sales in the current financial year to March 2010 to rise between 3% and 5%.
Maruti Suzuki, which sells one of every two cars sold in the country, led the growth in April with an 8.6% rise in sales. Rival Hyundai’s India sales rose 3.5% and No. 3 Tata Motors’ car sales were little changed from a year earlier.
Car makers are launching new models to attract customers and beat the slowdown.
Maruti, in which Japan’s Suzuki owns a controlling stake, is launching its new Ritz hatchback on Friday, while sales of Tata Motors’ much-awaited Nano small car would start in July.
Tata has said it received about Rs25 billion ($500 million) from the advance bookings of Nano, dubbed as the world’s cheapest car and the first 100,000 owners would be selected by a lottery.
Sales of trucks and buses, which are more linked to the pace of economic activity, fell 11.3% in April to 29,842 units, continuing the downward trend. SIAM has forecast their sales to rise 7% to 10% in 2009-10, but on Monday SIAM officials said the recovery had not yet begun in that segment.
Ashok Leyland, the second-largest commercial vehicle maker, said on Monday its sales in April plummeted 69%.
Motorcycle sales rose an annual 12.1% to 562,357 units in April, helped by demand from small towns and rural areas.