Indian Auto Giants See Sales on Rise

Feb. 1, 2012
Forecast is for car sales to grow 11%-13% in 2012-2013.

India's biggest auto maker Maruti Suzuki on Feb. 1 said sales in January rose for the first time in eight months, while rival car makers continued to show a steady pace of growth.

Maruti, majority-owned by Japan's Suzuki Motor Corp, said sales climbed 5.2% year on year to 115,433 vehicles, led by higher demand for its hatchback models and a jump in exports.

The last time the firm saw a rise was in May, since when it suffered a series of crippling labor disputes at one of its plants in the northern state of Haryana. The labor unrest has now eased.

Domestic sales were broadly flat at 101,047 vehicles against 100,422 in the same month a year earlier, but exports surged 54% to 14,386 units.

India, which has been one of the world's fastest growing car markets in recent years, suffered a slowdown in demand last year as many buyers deferred purchases or cancelled them due to costly auto loans and rising fuel expenses. However, demand has picked up slightly since November.

Ford said it sold 10,789 cars in January -- a near 8% increase year-on-year -- while Hyundai Motor's local subsidiary said sales increased 15% with sales of 49,901 units in January. The company sold 43,316 units in the year-ago period.

Leading vehicle maker Tata Motors said its domestic sales in January rose 14% year-on-year to 36,770 vehicles but sales of its flagship small cheap car, the Nano, rose by just 3%.

Analysts expect car sales to keep improving in the coming months, with India's central bank expected to start lowering interest rates as inflation shows signs of moderating.

"Maruti's improved data is pulling the industry up," said Mahantesh Sabarad, auto analyst with Fortune Equity Brokers. "With the macroeconomic conditions improving, demand for cars will rise."

Sales of new cars in India are likely to pick up in the next financial year, the industry body Society of Automobile Manufacturers (SIAM) has also predicted. SIAM forecasts car sales to grow 11% to 13% in 2012-2013, well above the zero to two percent growth it expects for this fiscal year.

More than 80% of sales in India in 2011 were for diesel rather than petrol cars, as consumers opted for the cheaper fuel which is still heavily subsidized by the government. The price gap between petrol and diesel is 25 rupees (about 50 cents) per liter, making diesel cars far cheaper to run.

Copyright Agence France-Presse, 2012

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