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Indian Automobile Sales Rose 9% on Good Performance of Car Segment
Jun 26, 2009

Volume sales of Indian automobile industry escalated in May 2009 by 9% on account of release of new car models and good performance of the two-wheeler segment.

According to the statistics released by the Society of Indian Automobile Manufacturers, India posted growth of 9% in auto sales during May 2009 by selling 9.29 Lakh Units compared to 8.53 Lakh Units sold in the same month last year, as reported by The Times of India.

Car segment registered an annual growth of 2.5% in May 2009 with total sales of 1.13 Lakh Units from 1.1 Lakh Units in May 2008. However two car giants, Tata Motors and Hyundai, witnessed downtrend in their sales during May 2009, but Maruti offset the negative effect with sales of 62,878 Units, an increase of 10%. The company received good response from customers for its new compact car Ritz launched on May 15, 2009.

The sales of scooters also flared up as companies recorded double digit growth, taking sales 11% up to 1.08 Lakh Units in May 2009 from 97,403 Units in the corresponding month previous year. Honda Motorcycle and Scooter India (HMSI) contributed significantly to this increment. The total sales of two wheelers also increased by 12% from 6.47 Lakh Units in May 2008 to 7.27 Lakh Units in May 2009 on account of strong demand.

Having suffered on account of economic slowdown and tight consumer financing, the sales have once again been gradually picking up since February 2009, when the government announced a series of stimulus packages and cut down interest rates.

It is expected that the announcement of guidelines on vehicle repossession norms by RBI will take automobiles demand into double digits. This will fuel the lending by Non-Banking Financial Companies (NBFCs). Moreover, monsoon will also play an important role as rural spending depends largely on good monsoon.

According to a Research Analyst at RNCOS, “Car sales in India are expected to make modest gains in the coming months and the launch of new compact car models such as Grande Punto by Fiat and Jazz by Honda in July 2009 will continue to make the industry growth buoyant. To further increase the demand, auto industry requires more relaxation in retail lending and lower interest rates.”