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Indian Auto Industry Shows Signs of Recovery
Jun 03, 2009

India’s car sales grew for the third successive month in April 2009 with the increasing liquidity, lowering interest rates and the launch of new models.

Releasing the statistics for automobile sales, the Society of Indian Automobile Manufacturers (SIAM) stated that 2009 has commenced on a good note for the Indian automobile industry, both from the point of view of total production as well as domestic sales in April 2009 as compared to April 2008, as reported by RTT News.

According to SIAM, the production and domestic sales grew 10% and 11% respectively in April 2009. The good performance displayed by the two-wheeler segment was the major factor for this growth.

After an extended period of decline that began in the later half of 2008, April was the third successive month for growth in domestic car sales. The sales jumped to 102,889 Units, up 4% from the sales figure of 98,752 Units recorded in April 2008. During the same period, the sales of passenger vehicles surged 4%, whereas that of multipurpose c and utility vehicles rose by 16% and 0.54% respectively. The sales of three-wheelers surged slightly by 2% in April and that of passenger three-wheelers increased 11%.

Increasing liquidity and lower interest rates are the main reasons spurring growth in the auto sales. Economic recession and the reluctance shown by lenders affected the auto sales badly in the final quarter of 2008, when a decline in sales was recorded. But the consumer spending has displayed an uptrend due to lower interest rate and rebound of bank lending.

Moreover, marriage season in India alongwith the launch of some new models such as Hyundai i20, Maruti Suzuki A-star and Fiat Linea has boosted the car sales. The commercial vehicle industry has also been benefited by the economic stimulus plans of the Indian government, like excise duty benefits, lowering of interest rates, etc.

According to a Research Analyst at RNCOS, “India, the third largest automobile market (by volume) in Asia after China and Japan, has been recovering from the slowdown phase that was observed by the industry towards the end of 2008. But to sustain this growth, better credit availability is required as banks still maintaining high credit-accessing criteria. So, the comprehensive recovery of the auto sector seems quite distant at the moment.”

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