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Indian Auto Sales Crossed One Million in Feb 09
Mar 21, 2009

Indian automobile sales surged 10.61% in February 2009, assisted by lower loan rates by the banks to reduce the impact of global crisis.

The Society of Indian Automobile Manufacturers (SIAM) has said that automobile sales in India reached 1.04 Million Units in February 2009, 10.61% higher than 942,955 Units sold in February 2008.

According to SIAM, sales of passenger vehicles (excluding exports) were recorded at 145,019 Units during February 2009, an increase of 15.02% over 126,077 Units sold in the corresponding month a year ago. During the same period, Indian two-wheeler sales surged to 836,926 Units, up 12.66% from 742,856 Units sold in February 2008, while the sales of three-wheelers (including goods carriers) increased by 5.06% from 28,544 Units to reach 29,989 Units. However, domestic commercial vehicles sales in February 2009 slumped to 31,069 Units, down 31.68% from 45,478 Units recorded during the same period a year ago.

The major boost to the Indian auto sales in February 2009 was provided by the lower loan rates and tax cuts passed on by firms to reduce the impact of economic slowdown. Further, the country generally witnesses robust demand in March with the tax cuts revealed in the February’s central budget. The government has already slashed down factory gate duties in December 2008 in an effort to reverse the declining growth trend.

Moreover, the financial system is flushing with funds and banks are also lending increasingly. Through financial stimulus plans, the country has sought to enhance consumer spending in the third largest economy of Asia. The central bank has trimmed the benchmark repurchase rate five times since October 2008 to bring it to the record lowest level.

Emerging markets such as Russia, South America, India and China have been looked upon as long-term growth markets by the auto makers. However, the recent global economic slowdown has shrunk the sales in these markets, resulting into lower growth prospects.

According to a Research Analyst at RNCOS, “Though the market has started witnessing somewhat streaming of finance, commercial vehicle and two wheeler segments are still to be benefited significantly as majority of buyers are preferring cars. The Indian automobile market is still waiting for a long-lasting recovery, and coming months would be challenging with tight credit and rising job concerns.”

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