Record Car Sales for India, Rising Prices Anticipated

Ronnie Schreiber
by Ronnie Schreiber
record car sales for india rising prices anticipated

For the first time, monthly car sales in India exceeded 150,000 units according to February numbers released by SIAM, the Society of Indian Automobile Manufacturers [via The Economic Times of India]. Those figures represent a 33% improvement over Feb. 2009. Analysts attribute the sales bump to people pulling the trigger in advance of expected higher taxes in the national budget. Indian automakers anticipate that the increased demand will slow as prices rise due to higher interest rates and new emissions standards.

In the eleven months ending in February, auto sales in India had a 25% increase after the Indian government announced cuts in excise duties and interest rates to stimulate an economy slowed by the global financial crisis in the fall of 2008.

Demand will slow, but automakers expect sales to continue to grow. Price inflation is not exactly unheard of when economies grow quickly and India is no exception. Carmakers recently increased prices by up to 4% when the excise taxes were reinstituted and are expecting another bump come April when they have to upgrade emissions equipment on new vehicles.

Tata Motors yesterday said the auto industry cannot meet the Euro-IV fuel emission standards without passing along costs to consumers. “There will be a price hike across the industry when the Euro-IV norms come in to effect,” said Tata Motors passenger car division president Rajiv Dube.

Sales of small cars in India should still be brisk as the duty reductions continue to apply in their case.

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