India's Car Sales Gain for First Time in Three Months
13th October 2008
India's passenger-car sales rose for the first time in three months in September, led by Hyundai Motor Co. and Maruti Suzuki India Ltd., as dealers stocked up before religious festivals that are peak demand periods.
Sales to dealers rose 2.8 percent to 108,823 from 105,822 a year earlier, the Society of Indian Automobile Manufacturers said in a statement in New Delhi today. Car sales declined in July and August, the first drops in more than 2 1/2 years, as higher loan rates and inflation damped demand.
Indian automakers raised production 18 percent last month to meet demand expected around the Oct. 28 Hindu festival of Deepavali, which is considered to be an auspicious time to make large purchases. The boost will be temporary as a stock market plunge and a slowing economy may keep consumers away from showrooms, said Ambrish Mishra, a Mumbai-based analyst.
``Interest rates are not going to come down, there is an economic slowdown and liquidity is still tight,'' said Mishra, an analyst at MF Global Sify Securities India Pvt. ``I don't think sales will improve significantly until December.''
Carmakers encourage dealers to stock about 15 percent more vehicles ahead of holidays such as Deepavali, the Hindu festival of lights, said Sandeep Singh, deputy managing director at Toyota Motor Corp.'s India unit.
Car Shortage
``We had clearly planned that there shouldn't be a shortage of cars during the festival season,'' Singh said in a phone interview today from Bangalore, where the company has its factory. Toyota's sales surged more than fourfold to 3,477 last month after it shipped the revamped Corolla Altis to dealers.
Industrywide sales growth was inflated because Deepavali was in November last year. That skews the growth rate in favor of September this year as the festival falls in October.
Inflation that rose to 16-year peak and loan rates that have almost doubled in the past five years had squeezed consumer spending in India. Car sales in the first half of the fiscal year that began in April increased 5.3 percent to 600,385, half the pace of last year, according to the Society's data.
The automakers group last month cut its growth forecast for the year to 10 percent from as much as 13 percent. The industry only collects data on shipments from factories to dealers and doesn't report retail sales in Asia's fourth-largest auto market.
Hyundai, the second-largest carmaker in India, boosted sales 24 percent last month on demand for its Getz, i10 and Santro hatchbacks. Maruti, India's largest carmaker, reported a 0.3 percent increase in sales.
Six of the country's 13 manufacturers, including Tata Motors Ltd. and Honda Motor Co., reported lower sales last month.
A decline in India's stock market, with the benchmark headed for its first annual drop in seven years, is also hurting demand. Vehicle sales in India have doubled in the past five years, prompting General Motors Corp., Ford Motor Co. and other automakers to announce $6 billion of investments in the country.
A stock market slump and inflation also damped demand in China, the world's second-largest vehicle market, where vehicle sales fell for a second straight month in September.
Source:Bloomberg