Automobile sales raced past a record 11.1 lakh units in January, beating the previous best posted in September last, as consumers rushed to drive away their dream machines before a possible rollback of last year’s tax cuts. Car sales too zoomed to a new record of 1.45 lakh units in the first month of the calendar, beating the previous best of 1.33 lakh sales recorded in November 2009, according to the latest data released by Society of Indian Automobile Manufacturers (SIAM) on Tuesday.
The spurt in sales, while reflecting the prevailing upbeat mood of the recovering economy and availability of cheap loans, is also partly attributed to fears that the vehicle prices will move up after the Union budget on February 26. With inflation still reigning high and economic growth well on track, many experts and analysts expect finance minister Pranab Mukherjee to withdraw the tax cut implemented last year.
This may lead to slower rise in vehicle sales in the coming months. “We fear if the stimulus measures go away in the upcoming budget, (and) future demand could be affected,” said Mayank Parekh, marketing and sales executive officer of Maruti Suzuki, the country’s largest carmaker. Vaishali Jajoo an auto analyst at Angel Broking, said the sales growth was marginally higher than expectations, but added that the uncertainty around the upcoming budget with respect to price hikes could also have led car buyers to advance their purchase decisions and car dealers to push sales. “ This is also expected to be true for sales during the current month,” she added.
Maruti sold a little over 81,000 vehicles this January, an increase of 21.02 per cent over the year-ago period. Its main rival Korean automaker Hyundai Motor recorded a much more impressive 40.85 per cent jump in sales to 29,601 units. The year-on-year growth in car sales at 32 per cent in January was almost half the more than 60 per cent growth in sales recorded in November’09. Car sales had increased 40.2 per cent y-o-y in December.
The high growth in the last two months of 2009, however, was also due to low base effect in 2008 when economic slowdown had hit auto sales, forcing the government to come out with a stimulus package in December.
Source: The Economic Times