Car sales in the country reached a new high in January despite rising food and fuel prices, higher sticker prices and costlier loans as a buoyant middle class ensured India remained one of the fastest-growing car markets in the world.
Domestic car sales grew 26% year-on-year to 1.84 lakh units in January, beating the previous best monthly sales of 1.83 lakh recorded in October, according to data released by the Society of Indian Automobile Association (SIAM) on Wednesday.
Marketers and industry experts, however, expect the growth to moderate in the next couple of months due to rising fuel prices and interest rates.
“We are cautious with the growth being moderated now and would be directly impacted in the coming months,” SIAM senior director Sugato Sen said.
“The lack of liquidity in the market coupled with rising interest rates on auto loans and the high commodity prices posed challenges for the industry that would be difficult to tackle in coming months,” he added.
Sen said the increased sale in January was partly due to customers postponing their purchase decisions in December.
Analysts tracking the sector said that besides inflation, higher interest rates and rising fuel prices, high base will also impact sales growth in coming months.
The Indian car market has been cruising at almost 30% growth rate month after month for almost two years now as rising disposable incomes, easy availability of loans, a robust economy and a slew of new cars drove Indians to buy vehicles.
“We had two years when growth was like 25-30 %. With concerns of inflation and rising car prices and some stricter lending for loans, we could witness this growth slight tapering off in the next few months,” Price Waterhouse auto analyst and partner Abdul Majeed said.
He, however, said increasing incomes and the buoyant economy will help auto industry post consistent increase in sales, in the region of 14-15 % this year.
Maruti Suzuki, India’s top carmaker, posted a 14.7% rise in January car sales — its slowest pace of monthly growth since March. While Hyundai Motors’ sales are grew to its lowest at 2.38% to 30,306 units in the same month.
Major carmakers such as Maruti Suzuki , Hyundai Motor and Volkswagen had hiked prices last month to offset higher raw material costs. Financiers such as the State Bank of India , HDFC Bank and Kotak Prime have increased interest rates on car loans by up to 1.5% in the past couple of months.
Overall, the auto industry grew 18% in January with sales of 13.22 lakh vehicles. This marks a slowdown as the domestic auto market had grown 30% in the first nine months of the fiscal.
The sales of trucks and buses, a key indicator of economic activity, rose 12.6% to 60,753 units last month.
Source – Economic Times