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India ? Passenger Car Sales to Grow Nearly 5% in FY 2009-10
Apr 22, 2009

Passenger car sales in India is expected to grow positively up to 5% during the financial year 2009-10 on account of the government’s stimulus packages provided to the sector.

According to the reports from the Society of Indian Automobile Manufacturers (SIAM), up to 5% increase is anticipated in the sales of passenger vehicle in India during fiscal 2009-10 whereas the sales of buses and trucks, an indicator of economic growth, are expected to grow 7-10% following a decline of over one-fifth in 2008, as reported by REUTERS.

During the fiscal 2008-09, the sales of domestic passenger cars increased by 1.31% to reach 12,19,473 Units from 12,03,733 Units in the fiscal 2007-2008. In March 2009, the total passenger car sales in the domestic market rose slightly to 1,29,358 Units from 1,28,098 Units in March 2008. The overall vehicle sales reached 8,93,934 Units in March 2009 by rising 1.09% over 8,84,313 Units in March 2008.

The stimulus aid granted by the government helped the Indian automobile industry, which was slipping into negative territory, to grow positively during the fiscal 2008-09. In the absence of stimulus packages, the sales of passenger vehicles would have declined 3% or have shown no growth whereas the commercial vehicles sales would have declined 30-40%, as per SIAM.

The demand for smaller and cheaper cars was stronger in mature urban markets. Moreover, the demand from rural areas of India was also appreciable, and it is boosting the automobile market.

Moreover, it is anticipated that the growth in passenger vehicles sales will stem from small cities and towns in the coming times. Also, with Tata Motors’ Nano, the cheapest car in the world, due to hit the Indian roads in July 2009, the demand for cars is expected to go up. The launch of Nano may also result in the formation of a new category of car owners.

According to a Research Analyst at RNCOS, “The sales of passenger cars in India are likely to climb up as the demand will rise in the coming times. Also, as the state transport corporations are placing higher number of orders, there will be an increase in sales of buses but trucks will remain to be strugglers. Considering the low penetration level, the passenger vehicle segment is India has high potential to observe long-term growth.”

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