Indian Car Sales Jump in July

Sales have risen for the past six months

Indian car sales jumped by nearly a third in July as new model launches and cheaper loans prompted customers to flock to automobile showrooms, industry data showed on August 10.

The figures marked the sixth monthly increase in car sales in India, eyed by global automakers as an important long-term growth market with sales sluggish in the U.S., Europe and Japan. India is one of the few countries where car sales have been increasing amid the worldwide economic downturn.

Passenger car sales rose 31% to 115,067 units in July from 87,901 units a year ago, the Society of Indian Automobile Manufacturers (SIAM) said.

"Lower (interest) rates and government stimulus have played a part in the rise" along with new launches, said Vaishali Jajoo, auto analyst at Angel Broking. Vehicle makers cut prices following a government reduction in value-added tax last December, part of a stimulus package to help the sector, and the central bank has made a series of rate cuts to spur the economy.

SIAM director General Dilip Chenoy said the sharp sales growth also reflected a low year-earlier base effect.

Car sales of market leader Maruti Suzuki India, which introduced its A-Star and Ritz small hatchbacks in the past year and makes one in every two cars sold in India, rose by 31% to 60,012 units from a year earlier. India's second-largest car manufacturer by sales, Hyundai Motor India, posted a jump of 54% to 23,193 units. Sales of Tata Motors Ltd, which began deliveries last month of the Nano, the world's cheapest car, jumped 21% to 14,537 cars.

Commercial vehicle sales, seen as a key barometer of overall economic health, jumped by 9.6% to 37,624 units, ending 11 months of decline.

Motorcycle sales climbed 19% to 546,245 units.

The car sales are watched as an important barometer of consumer sentiment. But the weak monsoon has clouded the outlook for growth in the months ahead as rural areas, where 700 million people live, are hit by poor harvests. "We have to wait and watch for the monsoon to have a clear idea of how much it will impact sales going forward," said Angel's Jajoo.

Vehicle manufacturers see huge potential in countries such as India and China, with their billion-plus populations. India is one of the world's least penetrated car markets with just seven autos per 1,000 people compared with 850 cars per 1,000 people in the United States.

Copyright Agence France-Presse, 2009

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