Mumbai: Sales at top automakers rose 20 to 30% in August, as analysts expected continued growth driven by strong demand in the festive months ahead but cautioned the rate of growth would slow against high comparisons and a possible rise in interest rates.
Maruti Suzuki, India’s leading car maker which is 54.2% owned by Japan’s Suzuki Motor Corp, posted a 24% rise in August sales, and the company said local sales in August were its highest-ever monthly sales.
“The second half of the year is a better period for the auto sales due to the festive season,” said Vaishali Jajoo, senior auto analyst with Angel Broking.
“Looking at the festive seasons coming in, dealers start stocking up. We can see that in the next month as well. The economy has also picked up and normal monsoon will also have a positive impact on rural sales,” she added.
India’s festive season starts in early September and peaks in early November after Diwali, the Hindu festival of lights.
Tata Motors Ltd, India’s leading maker of trucks and buses, said auto sales in the domestic market jumped 32% in August to 65,938 units.
Mahindra and Mahindra, India’s top utility vehicles and tractors maker, also reported a 29% jump in August vehicle sales.
While India auto sales are expected to rise further, that kind of growth is not sustainable when compared to the robust growth witnessed last year, Jajoo said. A possible interest rate hike is also a major concern, she added.
India has raised interest rates four times since mid-March to clamp down on inflationary pressures and there are concerns the central bank may lift rates again to curb price pressures.
“I think the interest rate hikes have still not impacted because, for one thing, the economic growth is higher, the consumer confidence has increased,” she said.
“Maybe if it increases by another 100 basis points, we can see the actual impact on financing and volumes.”
Limited component supplies from vendors is also becoming a stumbling block for automakers such as Mahindra & Mahindra and Maruti, which have had to curtail production in recent months.
Strong growth in india, Tata looks overseas
Demand for cars is growing rapidly in India, which is Asia’s third-largest economy and is slated to grow 8.5% this fiscal year.
Earlier on Wednessay, Tata Motors, which owns about two-thirds of the local market, said it plans to focus on Africa, Russia, China and the Middle East for growth.
“We plan to widen our passenger car, commercial vehicle range and also look to expand market share and focus on growth in these economies,” Chairman Ratan Tata told shareholders on Wednesday.
India’s leading carmaker Maruti has also said it would try to advance its capacity expansion plan.
India is one of the fastest growing automobile markets in the world. The country’s automobile sector grew 35%, on average, in the first four months of the current fiscal year, data from Society of Indian Automobile Manufacturers showed.
The trade organisation has forecast car sales growth of 12% to 13% in the year ending March 2011, an estimate analysts see as conservative.