Jumping sales: Car sales have increased due to easy bank loans and cut in interest rates
SALES of passenger cars in India jumped 22 per cent in February, while sales of commercial vehicles plunged by more than half, a trade group said yesterday, prompting analysts to warn that it's too early to say India's auto sector has recovered.
After four months of declines, domestic sales of passenger cars rose to 115,386 cars in February from 94,757 cars in the same month last year, the Society of Indian Automobile Manufacturers said.
Exports of passenger cars grew 31.3 percent to 26,063 cars from 19,848 a year ago, the group said.
The spurt was driven by easing bank credit and government tax cuts, two factors that may not spell a long-term recovery, analysts said.
“Turnaround is a strong word. Sequential spurt would be better,” said Vaishali Jajoo, an auto analyst at Mumbai’s Angel Broking.
“I’m very cautious on single digit volume growth in fiscal year 2010,” she added.
Public sector banks, which dominate lending in India, have finally responded to months of aggressive rate cuts by India’s central bank and reduced the interest rate on auto loans from about 13 per cent to about 10 per cent, Jajoo said.
India’s top exporters, Maruti Suzuki and Hyundai, have been helped by the growing appetite for small, fuel efficient cars in Europe, which is India’s major auto export market, she said.
Maruti Suzuki, India’s largest automaker, said its February sales and exports were the highest ever.
Domestic sales hit 70,625 in February, up 19.1 per cent from a year ago, and exports surged 89.9 per cent, to 8,565 vehicles.
Hyundai Motor India, India's largest passenger car exporter, said domestic sales rose 45.3 percent in February, to 21,215 vehicles, while exports hit 17,039 vehicles, an 18.3 percent increase from the same period last year.
“The overall market situation continues to be challenging and not much should be read into the February growth,’ Hyundai spokesman Arvind Saxena said March 2 when the company announced its monthly sales data. “We expect a fairly flat sales growth curve for the industry for the first quarter ending March 2009,” he added.
Commercial vehicle sales continued their freefall in February, with domestic sales down 51.3 per cent, to 13,003 vehicles and exports off 36.1 per cent, at 1,083 vehicles, according to the Society of Indian Automobile Manufacturers.
Commercial vehicle sales are tightly linked to industrial production and economic growth, both of which have been sliding in India. India’s economic growth skidded to 5.3 per cent last quarter, after four years of near nine per cent growth.
Tata Motors, India’s largest commercial vehicle maker, said overall domestic sales were 42,493 vehicles, a 15 per cent decline from last February, despite the fact that the company sold 35 per cent more commercial vehicles in February than it did in January.
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