New Delhi: Surging Indian car sales in November reinforced signs of recovery in Asia’s third-largest economy, with the sustained strong demand after the peak of the annual festival season catching industry suppliers off guard.

Car sales rose 61% to 133,687 in November from 83,121 a year earlier, with jump helped by an improving economy that has lifted consumer sentiment and the easier availability of loans, Society of Indian Automobile Manufacturers (SIAM) data showed.

Monthly car sales were stronger than in October and September, when sales were boosted by festival demand.

“The demand has picked up in such a short time that the inventory is not there," Vaishali Jajoo, autos analyst at Angel Broking said.

“There is a shortage of cars at the retail level, the waiting period is longer," he said, adding expectations of price increases could have contributed to the surge.

After a downturn in 2008, sales have picked up since early this year and annual growth has been in double digits for the past five months. The recovery has now spread to commercial vehicles, seen as a sign of improving business confidence.

Sales have been so strong, buoyed by stimulus measures, that auto part suppliers had been able to meet demand.

“They’ve not been able to keep up pace with the growth in the industry," Sugato Sen, SIAM’s senior director said. “Many companies have suffered. The down-the-line supply chain has not been able to match the capacity required for growth."

The head of Ford’s Indian operations, Michael Boneham told Reuters last month the industry got back on track so quickly that “everyone was caught napping".

The figures came a week after data showed the Indian economy grew an annual 7.9% in the September quarter, its fastest in 18 months and well above expectations.

In April, SIAM had cautiously forecast sales of passenger vehicles -- cars, utility vehicles and multi-purpose vehicles -- to nudge up 3-5% in the year to March 2010, after ending the 2008-09 fiscal year flat at 1.55 million units.

Between April and November, carmakers have sold 1.22 million passenger vehicles, a fifth more than a year ago, and SIAM said it would review its sales targets.

Price Rises?

Sales of trucks and buses, a gauge of economic activity, doubled from a year earlier to 40,847 units in November, although monthly sales were below September and October levels.

Motorcycle sales an annual rose 42.5% to 614,274.

The signs of strength are in stark contrast to a year earlier, when India was hit harder than expected by the global financial crisis and economic slowdown.

Car sales, a barometer of consumer sentiment in the absence of other indicators, had plunged nearly a fifth in annual terms November 2008, the worst fall in eight years.

With demand firmly on the upswing, some carmakers, including the Indian units of Toyota Motor Co and General Motors, are moving to lift prices to counter rising input costs and protect margins.

“This is a time to increase sales rather than consolidate prices," Sen said. “Things are still not well for the industry as originally anticipated."

India, along with China, is a shining spot for global automakers, with its strong demand amidst cheerless sales in developed markets like the United States and Europe.

US auto sales have dropped more than 25% through October this year, while those in China during the same period rose an annual 45%.