New Delhi/Mumbai: Car sales in India soared by a third in August to a record high on the back of its booming economy but growth is expected to moderate in coming months, slowed partially by limited component supplies.
Demand in India, one of the fastest growing automobile markets in the world and Asia’s third-largest economy, is expected to rise during the festive season that starts in September and peaks in November after Diwali, the Hindu festival of lights.
Most workers get their annual bonuses before Diwali.
“The momentum is too strong to completely die down. But there might be a sequential decline in the near future,” Sonam Udasi, head of research at IDBI Capital, said.
“More than interest rates, a rise in input costs will have an effect on sales,” he said.
Limited component supplies from vendors are becoming a stumbling block for automakers such as utility vehicle maker Mahindra & Mahindra and Maruti Suzuki that have had to curtail production in recent months.
India has raised interest rates four times since mid-March to clamp down on inflationary pressures and the central bank is expected to lift rates again next Thursday when it reviews policy.
Companies, led by Maruti, a unit of Japan’s Suzuki Motor Co, sold 160,794 cars in August, up 33.2% from a year earlier, data from the Society of Indian Automobile Manufacturers (SIAM) showed on Thursday.
It was the highest-ever monthly sales, the industry body said.
Sales of trucks and buses, a barometer of economic activity and led by Tata Motors, rose 28.1% to 52,030 units, while motorcycles sales climbed 19% to 727,542 units.
The automobile sector in India grew 35%, on average, in the first four months of the current fiscal year, data from SIAM has showed previously.
Sales at Maruti, Tata Motors and Mahindra & Mahindra rose 20% to 30% in August, the companies had said earlier.
India’s auto sector index was up 0.5% at 0553 GMT on Thursday. The index has more than doubled over the past 24 months.