Cheaper loan rates trigger spurt in car sales growth

Cheaper loan rates trigger spurt in car sales growth

New Delhi: India’s passenger car sales rose the most in more than five years in November as cheaper loan rates and economic expansion lifted demand for Maruti Suzuki India Ltd hatchbacks and Tata Motors Ltd’s Nano.

Sales totalled 133,687 units in November, 61% more than the 83,121 sold a year earlier, the Society of Indian Automobile Manufacturers (Siam) said in a statement in New Delhi on Tuesday. That was the biggest surge since February 2004, according to data compiled by Bloomberg.

India’s economy expanded at the fastest pace in one-and-a-half years in the quarter ended September, helped by record-low interest rates and economic stimulus. Gross domestic product (GDP) grew 7.9% in the last quarter, helped by the central bank holding its key reverse repurchase rate at a record-low 3.25% since April. Government spending and tax cuts took the value of stimulus measures to 12% of GDP.

Sales of trucks and buses jumped 98% in November from a year earlier to 40,847 while motorcycle and scooter sales gained 39% to 790,613.

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, car makers have sold 1.22 million passenger vehicles, one-fifth more than a year ago, and Siam said it would review its sales targets.