NEW DELHI (Bloomberg) -- India’s passenger car sales gained at the fastest pace in six years to a record as economic growth and introduction of new models such as Tata Motors Ltd.’s Nano and Fiat S.p.A.’s Grande Punto boosted demand.
Car sales rose 25 percent from a year earlier to 1.53 million, according to data released today by the Society of Indian Automobile Manufacturers in New Delhi. Industrywide vehicle sales, including vans, SUVs and trucks, increased 28 percent to 2.48 million vehicles, the group said.
Toyota Motor Corp., Volkswagen AG and General Motors Co. introduced 10 models in January as carmakers boosted investments in India and China after recession slammed demand in their home markets. Still, growth may slow this year as auto loan rates are poised to rise in India, said Umesh Karne, an analyst at BRICS Securities Ltd.
“The surge in economy, rising incomes and new models helped demand last year,” said Mumbai-based Karne. “It may not be possible to sustain such a fast growth rate going forward as we are looking at the possibility of another two to three rounds of interest-rate hikes.”
India’s central bank kept benchmark interest rates at a record low for about a year until the middle of March to help Asia’s third-largest economy stave off the effects of the global recession and expand. The central bank may raise interest rates to as much as 5 percent as it unwinds monetary stimulus amid an economic rebound, Saumitra Chaudhuri, who is a member of the planning agency that sets the nation’s development agenda, said in an interview yesterday.
Government spending and tax cuts took the value of state stimulus measures to 12 percent of gross domestic product between September 2008 and April 2009, helping to create jobs and boost demand.
The economy is estimated to grow at 8.2 percent in the current fiscal year, the finance ministry forecast in February. Growing demand pushed inflation to a 16-month high, prompting the central bank to raise interest rates on March 19 for the first time in almost two years.
Raising interest rates affects auto sales as almost four of five cars are bought on credit, according to Maruti Suzuki India Ltd., the nation’s biggest carmaker. Maruti boosted sales 20 percent last year to 765,526 cars, giving the company 50.1 percent of the local passenger-car market.
Fiat, Renault head in opposite direction
Fiat, which began selling the Grande Punto in June, more than tripled sales last year to 24,806. It was the fastest-growing carmaker in India. Renault SA’s venture with Mahindra & Mahindra Ltd. was the only automaker among the 16 manufacturers to report a drop in sales.
Industrywide passenger-car sales gained 20 percent to 155,600 units in March from a year earlier, the group said.
“The biggest worry now is what is happening to commodity prices,” said Pawan Goenka, president of the association, told reporters in New Delhi today.