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India’s car industry has returned to growth following a long period of decline, an early sign of a turnround in Asia’s third-largest economy as Narendra Modi, the new pro-business prime minister, takes over in New Delhi.
Car sales grew 3.1 per cent year-on-year this May to 148,577 units, the first month of expansion since February, according to data from the Society of Indian Automobile Manufacturers, a trade body.
Yaresh Kothari, a motor analyst at Mumbai’s Angel Broking, said: “Sentiments have improved post the new government taking charge and with steps being taken to restore economic growth, definitely the demand environment should improve.”
The election of Mr Modi as India’s prime minister late last month has sparked hopes that his new government with a firm mandate will revive the moribund economy.
The consumer mood had begun to change even before the results, industry analysts say, given expectations that the former Congress-led administration would be driven out of power.
As well as political change, sales have been helped by a series of new launches as dealers stock up on new models, including the Celerio hatchback from Maruti Suzuki, the market leader by sales, and the City saloon from Honda of Japan.
Domestic sales at Maruti were up 16.4 per cent this May compared with the same period a year earlier, at 90,560 units. Meanwhile, Honda sales grew 18 per cent in the same period to 13,362 units.
“The next six months will be a rebuilding of the market – we’re still in a very fragile stage,” said Deepesh Rathore, director of Emerging Markets Automotive Advisors, a New Delhi-based research group.
In particular, industry analysts are watching to see whether the new government will raise excise duties, which were lowered in the interim budget this February, providing a much-needed boost to the automotive sector at the time.
The market has been shrinking for more than a year in India as economic growth has slowed to below 5 per cent, consumer sentiment has turned weak and interest rates have been raised repeatedly.
A sustained slowdown in industrial activity has hit the commercial-vehicles segment, with domestic sales down 15.3 per cent this May to 46,986 units.
The market for two-wheelers has, by contrast, provided relief to the sector as affordable bikes have continued to prove popular.
India’s car industry returns to growth - FT.com
Car sales grew 3.1 per cent year-on-year this May to 148,577 units, the first month of expansion since February, according to data from the Society of Indian Automobile Manufacturers, a trade body.
Yaresh Kothari, a motor analyst at Mumbai’s Angel Broking, said: “Sentiments have improved post the new government taking charge and with steps being taken to restore economic growth, definitely the demand environment should improve.”
The election of Mr Modi as India’s prime minister late last month has sparked hopes that his new government with a firm mandate will revive the moribund economy.
The consumer mood had begun to change even before the results, industry analysts say, given expectations that the former Congress-led administration would be driven out of power.
As well as political change, sales have been helped by a series of new launches as dealers stock up on new models, including the Celerio hatchback from Maruti Suzuki, the market leader by sales, and the City saloon from Honda of Japan.
Domestic sales at Maruti were up 16.4 per cent this May compared with the same period a year earlier, at 90,560 units. Meanwhile, Honda sales grew 18 per cent in the same period to 13,362 units.
“The next six months will be a rebuilding of the market – we’re still in a very fragile stage,” said Deepesh Rathore, director of Emerging Markets Automotive Advisors, a New Delhi-based research group.
In particular, industry analysts are watching to see whether the new government will raise excise duties, which were lowered in the interim budget this February, providing a much-needed boost to the automotive sector at the time.
The market has been shrinking for more than a year in India as economic growth has slowed to below 5 per cent, consumer sentiment has turned weak and interest rates have been raised repeatedly.
A sustained slowdown in industrial activity has hit the commercial-vehicles segment, with domestic sales down 15.3 per cent this May to 46,986 units.
The market for two-wheelers has, by contrast, provided relief to the sector as affordable bikes have continued to prove popular.
India’s car industry returns to growth - FT.com
