Monday, May 25, 2009

India car sale up but sector still shaky

Indian car sales grew for a third straight month in April, according to data Monday, but an industry body said it was too soon to say the sector was on the road to recovery.

Sales rose 4.2 percent to 102,899 units for April as car buying continued to pick up after the industry went into a tailspin last October, hit by a slowing economy.

But Sugato Sen, senior director of the Society of Indian Automobile Manufacturers (SIAM), warned: "Things are still very sensitive."

In the passenger car segment, sales of Japanese-owned market leader Maruti Suzuki India raced ahead in April by 8.61 percent to 56,221 units from a year earlier.

South Korea's Hyundai unit, the second-largest carmaker in India, posted a 3.49 percent sales rise to 22,241 units. Top vehicle maker Tata Motors' sales were flat at 11,202 uJustify Fullnits.

Total vehicle sales rose 10.76 percent to 894,058 units.

Two-wheeler sales showed the strongest rise for April, surging 13.71 percent to 700,995 units from the same period last year as consumers turned from cars to cheaper motorbikes and scooters.

Costly loans and hesitation by banks to finance new purchases in the wake of the global financial crisis have slowed the overall vehicle market, although the numbers began to rise again in February.

In the motorcycle segment, market leader Hero Honda, which has been targeting rural India where sales are less dependent on credit financing, saw sales surge by 25.87 percent year-on-year to 348,132 units.

But sales of rival Bajaj Auto, which is focused on urban centres and whose presence is more limited in the rural market, slid 22.88 percent to 106,516 units.

The country's carmakers cut prices following a government reduction in value-added tax last December, part of a stimulus package to help the vehicle and other sectors.

Despite current woes, analysts say India holds promise for global automakers as the country of 1.1 billion people has one of the world's least penetrated car markets -- at just seven vehicles per 1,000 people compared with 550 per 1,000 in nations like Germany.

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