New Delhi: Car sales in India posted their best May ever, rising by a third from a year ago, an industry body said on Wednesday, as rising incomes and a rapidly expanding economy offset the impact of price increases.
Analysts said car demand was likely to remain strong over the next few months on improved economic outlook and easy availability of finance, and the expected normal monsoon rains could give further fillip to sales in one of the world’s fastest growing markets.
The four-month annual monsoon, which is vital for farm output and rural incomes and impact demand for goods ranging from cars to televisions, hit the country’s southern coast last week as scheduled.
“Consumer confidence level is high in the market and that should help the demand in the near term,” said Vijay Chugh, an automobile sector analyst with Ambit Capital.
“From rural demand perspective, monsoon will be a factor.”
India could maintain an 8.5% growth in 2010-11 despite the euro zone problems, provided there is a normal summer monsoon, Union finance minister Pranab Mukherjee had said on Tuesday.
Domestic firms sold 148,481 cars in the month, compared with 113,810 units a year ago, data from Siam showed. It was the highest sales in May ever, the industry body said. Sales of trucks and buses, a barometer of economic activity, rose 58% to 48,580 units in May, Siam said.
Total two-wheeler sales in May increased 28.66% to 9,36,555 units from 7,27,933 units in May 2009, adds PTI.
Rising costs of raw materials such as pig iron and steel and prospects of a rise in interest rates are, however, concerns for the cars makers such as Maruti Suzuki and Tata Motors in India.
“Because of inflation if steps are taken to control money supply that will have an impact,” Vishnu Mathur, director general of the Society of Indian Automobile Manufacturers (Siam), told reporters, after releasing the numbers.
“Interest rates continue to remain stable (now). Availability of finances is absolutely not an issue.”