India cars sale hits all time high

NEW DELHI -- Monthly car sales in India hit an all-time high in July, racing ahead of the previous record in March, as new models and rising disposable income encouraged consumers to buy vehicles.
Local sales totaled 158,764 cars in July, up 38% from the 115,084 recorded a year earlier, according to data issued Monday by the Society of Indian Automobile Manufacturers. In March, auto makers had sold 155,600 units in India.

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A man walks between cars at a finished goods yard in Ahmedabad, India, April 21, 2010."The growth in the car market is helped by the sustained effort of auto companies to tap the rural market," said Vishnu Mathur, director-general of the society.

Just 12 people on an average among 1,000 Indians own a car or utility vehicle, while the percentage of vehicle owners is much smaller in rural areas. This growth potential amid rising income levels in the second-fastest-growing major economy is encouraging auto makers to launch new models, especially of small cars as most local buyers prefer them because of low price and running cost.
A key reason for higher car sales has been easy availability of loans at low interest rates. However, double-digit inflation has forced India's central bank to raise lending rates by 1.0 percentage point since March, including a quarter-percentage-point hike late July, which could make loans more expensive.
However, Mr. Mathur said the recent round of rate hike has been modest and unlikely to hit sales in the near-term.
Meanwhile, the growth in car sales is likely to overtake the society's projection of 12%-13% in the current fiscal year through March. "We are looking at our growth projections and may revise them upward in the next few months," Mr. Mathur said.
Sales may set new records in October and November, spurred by a number of Hindu and Muslim festivals, considered auspicious to acquire assets.
"New car models will continue to expand the market, with sales likely to be strong in September too" as the festival season starts during the month, said Surjit Arora, an analyst at Mumbai-based brokerage Prabhudas Lilladher Pvt. Ltd.
Local sales at Maruti Suzuki India Ltd. rose 27% to 76,111 cars in July.
The Indian unit of Suzuki Motor Corp. makes eight small-car models, including the Alto, Swift, WagonR, Ritz and Estilo. It launched a variant of the Alto with a 1.0-liter engine last week to retain the company's leadership in the Indian car market as new entrants challenge its dominance.
The local unit of Ford Motor Co. posted a more-than-fourfold rise in its July sales to 8,473 cars from 2,081 a year earlier. The company introduced the Figo, its first small car in India, in March.
Nissan Motor Co. sold 955 cars in the local market, up from just 17 a year earlier. Sales were helped mainly by its new small car, Micra, which was introduced in July.
The Indian unit of Hyundai Motor Co. sold 28,811 cars, up 24% from a year earlier, while sales at Tata Motors Ltd. grew 69% to 24,613 units.
Sales of commercial vehicle and two-wheelers also recorded strong gains during the past month, data from the society showed.
Local truck and bus sales grew 37% to 51,481, helped by strong performances from market leader Tata Motors, second ranked Ashok Leyland Ltd. and Mahindra & Mahindra Ltd.
Truck and bus sales at Tata Motors rose 30% in July to 30,827 vehicles, while those of Ashok Leyland grew 69% to 6,022 vehicles.
In the motorcycle segment, sales rose 30% to 710,621 units as Hero Honda Motors Ltd., Bajaj Auto Ltd. and TVS Motor Co. reported higher sales.
Scooter sales increased 36% to 167,195 units with Honda Motorcycle and Scooter India Pvt. Ltd. and Suzuki Motorcycle India Pvt. Ltd. posting gains.
Overall, vehicle exports in July soared 42% to 198,368 units.
 
Write to Prasenjit Bhattacharya at prasenjit.bhattacharya@dowjones.com


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Cash for Clunkers Deal Drives Auto Sales

U.S. auto sales rose to their highest levels of the year in July as consumers rushed to trade in older vehicles under a government incentive program that has become so popular it is in danger of running out of money.

Automakers issued their sales reports Monday, raising hope that the sagging auto industry is headed for a recovery, although some analysts cautioned that a turnaround would still be slow. The uptick comes as Congress considers whether to provide up to $2 billion more for trade-in incentives to keep the effort going.

Ford said its sales were up 2.4 percent over the same period a year ago, its first monthly increase in two years. The automaker attributed much of the gain to the Cash for Clunkers program, which allows consumers to receive rebates for turning in older cars for more fuel-efficient models.

George Pipas, sales analyst for Ford, said the automaker thought it was going to fall short of last year's July sales level until the government's stimulus kicked in.

"Cash for clunkers put us over the top," Pipas said.

Subaru said it also benefited from the trade-in program, as sales were up 34 percent.

Chrysler, General Motors and other major automakers did not show gains, but interest in the rebates appeared to have eased their losses as well.

Sales slid 9.4 percent for Chrysler, 11.4 percent for Toyota, 17 percent for Honda, 19.4 percent for General Motors, 1.4 percent for Volkswagen and 25 percent for Nissan. Germany's Daimler AG said its U.S. sales dropped 24 percent in July because few gas guzzlers were being traded in for Mercedes-Benzs.

Companies sold 997,824 cars and trucks in the United States, a 12.2 percent decline from July 2008, according to preliminary data released Monday by research firm Autodata. The monthly figure for car sales translates to an annualized rate of 11.24 million cars, far off 2007's pace but one the government has said could help GM and Chrysler return to profitability.

George Augustaitis, market analyst for U.S. auto sales at auto consulting firm CSM Worldwide, said the monthly sales numbers showed the government's clunker program "really drove people into dealerships." But he predicted that the program's popularity could wane if the economy remains mired in recession and consumers remain reluctant to spend.

"With this economic recession, American households lost wealth. Savings rates were at all times low. Baby boomers are retiring. People are not going to run out and spend like they would have in the past. This is going to be a slow recovery, even in autos," Augustaitis said.

The clunker program kicked off a little more than a week ago and so many consumers sought to take advantage of the program that it almost ran out of money. The House hastily approved another $2 billion for the program on Friday, and many are hopeful that the Senate will pass that measure.

source : http://www.washingtonpost.com