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Indian Car Sales Rose 12% in Last Financial Year
Jun 10, 2008

The Indian passenger car industry experienced 12% growth in the financial year 2007-08 against the previous fiscal.

The Society of Indian Automobile Manufacturers (SIAM) said that the sales of passenger cars in India went up sixth time in a row by 12% in 2007-08 compared to 2006-07, as reported by
Bloomberg.com. The double-digit growth rate recorded by the Indian automobile industry during the fiscal 2007-08 is due to the launch of new cars such as Honda City’s new range of mid size cars and Maruti SX4.

In absolute terms, the figure of sold cars in 2007-08 reached around 1.2 Million, whereas that in the fiscal 2006-07 was 1.07 Million, said SIAM.

The boost in car sales is mainly attributed to tax reductions and economic growth. Besides, rising status of consumers due to high-paid jobs and the economic gains from the stock market encouraged people to buy new cars. Also, increasing disposable income of people substantially increased the car sales in the country.

In addition, the excise duty cut announced in the budget reduced prices of cars, thus attracting people to the car market. Also, the car manufacturers introduced new models in the market after a low-key performance reported by the industry during April last year. These new models, accompanied by low price and easy loan facilities led sales in the Indian car industry to spur during 2007-08.

But Dilip Chenoy, Director General, SIAM, said, “The rising costs of steel and other inputs that go into making an automobile are also a concern for the vehicle industry”, as reported by
Bloomberg.com on April 10, 2008. Therefore, according to the industry experts, increase in the manufacturing cost will push up the prices of vehicles in future and could threaten the automobile industry.

According to a Research Analyst at
RNCOS, “Expansion plans announced by major automobile players reflect the high growth prospects of the Indian automobile market. But an increase manufacturing cost could pose a big challenge for the industry. Therefore, companies should give attractive offers such as easy installment plans and low price to draw the customers attention.”

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