Car sales in India hit the vertex in Feb 2012

February 2012 saw the biggest surge in the car sales and monthly industrial production. Amidst India’s economic slide, this increase in numbers has definitely brought in a ray of optimism and has also reduced the chances of central bank cutting down the interest rates. India’s economic growth has witnessed a dip from 8.4 percent last year to 7 percent this fiscal year. Indian President Mrs. Pratibha Patil seems positive that India’s economic growth will bounce back to 8 to 9 percent this fiscal and also assured the Parliament that the economy will get back on its high growth trajectory. She also added that the growth prospects in India are governed by the high domestic savings and investment rates, a stable democratic policy and favorable demographics in the long run the Indian economy will remain robust. The national budget for the new financial year is supposed to be announced this Friday and the excise taxes on vehicles are expected to go up. The diesel vehicles might see an extra tax being imposed on them since the demand of diesel cars has dramatically increased over the years due to less cost of diesel than petrol.

According to SIAM (Society of Indian Automobile Association), the car sales have seen a theatrical growth of 13 percent in February 2012 as compared to February 2011; the number has crossed 200,000 for the first time in a single month. The total sales figure is a soaring 211,402. As per the Senior Director of SIAM, Sugato Sen, this hurl in the car purchase is more due to the pre-budget buying but there has definitely been advancement in the response of the people, they believe that the interest rates are not going to surge anymore. A rebound in manufacturing and a rush in consumer nondurable goods production of 42.1 percent have been observed which has resulted in the 6.8 percent rise in the industrial production in January as compared to the last year. However, the production of capital goods which are an indicator of investment like factories, machines and tools have seen a dip of 1.5 percent from last year which is the fifth decline in the row. Mr. Sen stated that the car sales for the fiscal year will probably grow from 0 to 2 percent. The sales of passenger vehicles including SUVs are expected to grow 2 to 4 percent and the commercial vehicles sales are expected to rise 18 to 20 percent. Experts suggest that going forward the interest rates are likely to be moderate which will be a relief to the automakers. The government might impose a tax of around Rs. 81,000 ($1,620) on diesel vehicles.