Vehicle sales seen at record high for 2nd yr

NEW DELHI: Indian vehicles sales are expected to reach a record high for the second year in a row in 2010/11, as rising incomes in a rapidly growing economy boosts demand.

"If we don't get any major surprises ... we expect a growth of 10-15 per cent for the industry," Pawan Goenka, president of Society of Indian Automobile Manufacturers (SIAM), said on Friday.

India, whose economy is projected to expand 8.5 per cent in the 2010/11 year that started on April 1, is one of the few regions in the world where demand for automobiles has been rising in double digits.

In China, the world's biggest auto market, sales of passenger cars grew by almost two-thirds last month as buoyant consumer sentiment bolstered spending on big-ticket items in the world's third-largest economy. But growth is seen slowing from the current quarter.

In India, sales of vehicles -- including cars, utility vehicles, trucks, buses, motorcycles and scooters -- jumped an annual 26.4 per cent in 2009/10 to 12.3 million units, SIAM data showed.

That surpassed the previous record of 10.12 million vehicles sold in 2006/07, before the global financial crisis halted the rise in the following year.

Car sales are expected to rise on an improving economy and motorcycle makers are increasing capacities in anticipation of increased demand, especially in the popular 100cc segment.

Sales could also get a boost from companies such as General Motors, Ford and Volkswagen, all of whom have launched their new compact cars in the past three months.

Sales of passenger vehicles, which include cars and utility vehicles, are expected to rise to 4.5 million units by 2015/16, Goenka said, when the total value of the auto industry would be worth $145 billion.

"For this we need to grow at 16-17 per cent annually," he said.

Passenger vehicles sales raced 25.6 per cent in 2009/10 to 1.95 million units, SIAM said.

Rising commodity costs, possible increase in taxes, hardening interest rates and new emissions norms pushing vehicle prices higher were the risks for the industry, Goenka said.

Maruti Suzuki, India's largest car maker and a unit of Suzuki Motor Corp, and utility vehicle leader Mahindra & Mahindra raised prices this month, citing higher costs from Euro IV emission norms.

In March, the central bank raised interest rates by 25 basis points and economists expect further hikes as the government battles to quench inflationary pressures.

Analysts expect sales in this quarter to be subdued as customers contend with higher vehicle prices and fuel costs.

"In the April to June quarter, sales are usually tepid and this time with most of the purchases being crowded in January, February and March, we do not expect much sequential growth," said Surjit Arora, auto analyst with Prabhudas Lilladher.

MARCH SALES

Car sales in India rose an annual 20.1 per cent in March, with customers advancing purchases ahead of price hikes.

Auto firms jacked up prices from April 1 due to new emission norms-related expenses and rising raw material costs.

Domestic firms sold 155,600 cars in March, compared with 129,585 units a year ago.

Sales of trucks and buses, a barometer of economic activity, rose 61.2 per cent to 67,362 units in the month, SIAM said.

Source: Indiacar.com Source Source : Economic Times (4/9/2010)