Car sales in May rose to 1.48 lakh units

The Indian automobile industry posted its best performance in May with a 30% growth in car sales, powered by a handful of launches in recent months and a surfeit in consumer spending.

Car sales in May rose to 1.48 lakh units from 1.13 lakh a year ago, showed data by Society of Indian Automobile Manufacturers (Siam) on Wednesday. Total vehicle sales, including utility vehicles grew to 1.9 lakh, the industry association said.

“This is the best performance by the Indian auto industry in May, which is expected to continue in the next half of 2010,” said Siam director-general Vishnu Mathur. “Our economy is growing very rapidly. The per capita income has almost touched $1,000 and that's a magical figure, which is the threshold for automobile demand.”

Small cars continued to dominate sales with market leader Maruti Suzuki, which sells every second car in India, recording its best performance in May as sales jumped 27% to 90,041 units. New players in the segment such as Ford Motor, General Motors and Volkswagen too benefited from a robust demand for their recently-launched Figo, Chevrolet Beat and Polo models.

Siam attributed the record growth in car sales and the overall improvement across vehicle segments to factors such as stable interest rates and easy availability of finance.

Despite robust sales, the growth in car sales in May fell short of the 40% rise posted in April from a year ago. Concerns such as rising costs of raw materials like pig iron and steel and prospects of a rise in interest rates are also looming for automobile companies. Even so, auto sector analysts were optimistic on the growth prospects for the industry in coming months.

“The market is showing positive signs and the auto industry would remain robust for the first half of the current fiscal,” said Angel Broking analyst Vaishali Jajoo.

The pervasive feeling is that demand is likely to remain strong in the near term because of a robust economic outlook and the easy availability of finance. The onset of the monsoon could also give a further boost to sales in one of the world's fastest growing markets, analysts said.

For many carmakers, May was a fruitful month. Helped by its new hatchback Figo, sales of Ford Motors India surged nearly four-fold to 7,820 units in May. American rival General Motors India that makes Chevrolet Beat and Spark posted a 72.5% rise in sales to 6,712 units.

Likewise, sales of Toyota Motor Corp, which has seen strong demand for its Fortuner sports utility vehicle, grew 54% to sell 6,050 units in the month.

May was equally robust for two-wheeler companies with sales rising 29% to 9.36 lakh units. Motorcycle sales, in particular, continued to tick, increasing 26% to 7.25 lakh units.

Market leader Hero Honda reported 12% rise in vehicle sales to 4.01 lakh units while rival Bajaj Auto sales shot up 68.73% to 1.91 lakh units.

For commercial vehicles too, May was a lucrative month as sales grew 58% to 48,580 units, led by an 88% rise in the sales of heavy trucks. Commercial vehicle demand is seen as an important barometer of industrial and economic activity in the country.

Source: indiacar.com Source : Economic Times (6/9/2010)