Sales by top Indian automakers rose 20% to 30% in August, as analysts expected continued growth driven by strong demand in the festive months ahead but cautioned the rate of growth would slow against high comparisons and a possible rise in interest rates.
Maruti Suzuki posted a 24% rise in August sales to 104,791 vehicles, growing 23.6% in the month. This includes exports of 12,117 units and was the highest ever monthly sales recorded by the company.
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“The second half of the year is a better period for the auto sales due to the festive season,” Vaishali Jajoo, senior auto analyst with Angel Broking, told Reuters.
“Looking at the festive seasons coming in, dealers start stocking up. We can see that in the next month as well. The economy has also picked up and normal monsoon will also have a positive impact on rural sales,” she added.
India’s festive season starts in early September and peaks in early November after Diwali, the Hindu festival of lights.
Tata Motors said sales in the domestic market jumped 32% in August to 65,938 units. Mahindra and Mahindra also reported a 29% jump in August sales.
While India auto sales are expected to rise further, that kind of growth is not sustainable when compared to the robust growth witnessed last year, Jajoo said. A possible interest rate hike is also a major concern, she added.
India has raised interest rates four times since mid-March to clamp down on inflationary pressures and there are concerns the central bank may lift rates again to curb price pressures.
“I think the interest rate hikes have still not impacted because, for one thing, the economic growth is higher, the consumer confidence has increased,” she said.
“Maybe if it increases by another 100 basis points, we can see the actual impact on financing and volumes.”
Tata Motors said it plans to focus on Africa, Russia, China and the Middle East for growth.
“We plan to widen our passenger car, commercial vehicle range and also look to expand market share and focus on growth in these economies,” chairman Ratan Tata told shareholders on Wednesday.
