Indian car sales jump in July

NEW DELHI: Indian car sales jumped by nearly a third in July as new model launches and cheaper loans prompted customers to flock to automobile showrooms, industry data showed Monday.

The figures marked the sixth monthly increase in car sales in India, eyed by global automakers as an important long-term growth market with sales sluggish in the United States, Europe and Japan.

India is one of the few countries where car sales have been increasing amid the worldwide economic downturn.

But there was concern about whether an unusually dry monsoon, which has hurt agriculture output in the still mainly rural nation of nearly 1.2 billion people, could affect demand for new vehicles in coming months.

Passenger car sales rose 31 percent to 115,067 units in July from 87,901 units a year ago, the Society of Indian Automobile Manufacturers (SIAM) said in a statement.

"Lower (interest) rates and government stimulus have played a part in the rise" along small hatchbacks in the past year and makes one in every two cars sold in India, rose by 31.15 per cent to 60,012 units from a year earlier.

India's second-largest car manufacturer by sales, Hyundai Motor India, posted a jump of 53.99 percent to 23,193 units, SIAM said.

Sales of Tata Motors Ltd, which began deliveries last month of the Nano, the world's cheapest car, jumped 21 percent to 14,537 cars. with new launches, said Vaishali Jajoo, auto analyst at Angel Broking.

Vehicle makers cut prices following a government reduction in value-added tax last December, part of a stimulus package to help the sector, and the central bank has made a series of rate cuts to spur the economy.

SIAM director General Dilip Chenoy said the sharp sales growth also reflected a low year-earlier base effect.

Car sales of market leader Maruti Suzuki India, which introduced its A-Star and Ritz

Commercial vehicle sales, seen as a key barometer of overall economic health, jumped by 9.6 percent to 37,624 units, ending 11 months of decline.

Motorcycle sales climbed 19.48 percent to 546,245 units.

Indias economy grew by a better-than-expected 5.8 percent in the quarter ended March.

The car sales are watched as an important barometer of consumer sentiment. But the weak monsoon has clouded the outlook for growth in the months ahead as rural areas, where 700 million people live, are hit by poor harvests.

The poor rains have come just as India's economy shows tentative signs of recovery.

"We have to wait and watch for the monsoon to have a clear idea of how much it will impact sales going forward," said Angel's Jajoo.

Vehicle manufacturers see huge potential in countries such as India and China, with their billion-plus populations.

India is one of the world's least penetrated car markets with just seven autos per 1,000 people compared with 850 cars per 1,000 people in the United States.