Wednesday, July 8, 2009

India June Car Sales Rise 7.8%

Car sales in India rose for the fifth straight month in June, driven primarily by lower lending rates and the introduction of new models from auto makers.

Sales climbed 7.8% in June to 107,531 cars from the 99,741 sold a year earlier, showed data issued Wednesday by the Society of Indian Automobile Manufacturers industry group.

Higher borrowing costs and a slowing economy reduced demand for cars and two-wheelers in Asia's third-largest automobile market last year.

But sales began to recover earlier this year after a slew of stimulus packages, including tax cuts, from the federal government and a lowering of borrowing rates by financial institutions.

Compared to a year earlier, car sales grew 22% in February - the first monthly rise since last September - 1% in March, 4.2% in April and 2.5% in May.

"Overall, the auto industry has exhibited a positive trend in volume growth over the last four to five months," Vaishali Jajoo, an analyst at Mumbai-based Angel Broking, said in a recent report.

Ms. Jajoo, however, said the rising trend in vehicle sales will only be confirmed when auto makers report a gradual positive trend in volumes over the next couple of months.

Automakers in India have introduced several new small cars and sedans since January in an effort to lure more customers.

Maruti Suzuki India Ltd. began selling the Ritz, its seventh small car model, in May as it worked to maintain its leadership in the expanding market.

Sales at Maruti - a unit of Suzuki Motor Corp. - gained 12% to 54,693 cars as the market leader sold more A-Star, Ritz and Swift cars.

Fiat SpA introduced its Grande Punto hatchback last month, with the company lifting car sales to 2,464 units in June from 500 a year earlier.

Second-ranked carmaker Hyundai Motor Co. posted a 5.2% rise to 23,013 cars, while Tata Motors, the country's third-largest auto maker, rose 3.2% to 13,732 cars.

Sales at Honda Motor Co.'s local unit increased 13.5% to 5,039 cars in June, boosted by the introduction of the Jazz hatchback model.

"Our full-year outlook was based on stimulus packages," Dilip Chenoy, SIAM's director general told reporters, referring to the association's annual sales outlook announced in April. "Currently nothing has changed and it is too early to factor in the impact of the monsoon."

Normal monsoon rains are considered key to higher sales of cars, commercial vehicles and motorcycles in India's growing rural markets. About half of the country's agriculture depends on monsoons rains.

Monsoon rains are forecast to be below normal this year and auto makers have previously said they are studying for possible impact of this delay on their sales.

SIAM had forecast local car sales to grow 3%-5% in this fiscal year that began April 1. Truck and bus sales may grow 7%-10%, while that of motorcycles and scooters are projected to rise up to 5%.

Local sales of trucks and buses slid 12.5% to 36,193 vehicles in June because of a decline in sales of medium and heavy commercial vehicles.

Sales in the medium and heavy commercial vehicle segment declined 31% to 15,659 vehicles as Tata Motors and Ashok Leyland - the top two manufacturers - posted lower sales in a slowing economy.

Light commercial vehicle sales, however, increased 10% to 20,534 units in June.

In the motorcycle segment, sales gained 16% in June to 550,833 units as Hero Honda Motors Ltd., Yamaha Motor Co. and Honda Motorcycle & Scooter India Ltd. saw an increase in demand.

Motorcycle sales of second-ranked Bajaj Auto Ltd. and third-ranked TVS Motor Co., however, declined.

Scooter sales rose 25% to 111,980 units in June, with Hero Honda, Honda Motorcycle and TVS posting higher sales.

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