Car sales in India are likely to rise marginally this fiscal year after two straight years of decline, boosted by quicker economic expansion and tax cuts under a new government, a news report said.
Passenger cars sales fell nearly 5% in the year ended 31 March and almost 7% a year earlier after more than a decade of increase, as buyers were put off by high inflation and interest rates and slow growth in Asia’s third-biggest economy, Reuters reported.
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The economy could be in for a turnaround if an ongoing general election ends on 16 May with the opposition Bharatiya Janata Party led by pro-business politician Narendra Modi coming out on top, as opinion polls suggest.
Economic growth was 4.7% in the three months ended December – nearly half the rate of the boom years of the past decade – but the government expects improvement, forecasting gross domestic product (GDP) of 4.9% for the fiscal year ended March.
“Not fancy (car sales) growth but hopefully some moderate growth because there has been some improvement in GDP numbers in recent months,” Vikram Kirloskar, president of the Society of Indian Automobile Manufacturers (SIAM), told Reuters, referring to sales of cars and utility vehicles for the just started fiscal year to 31 March, 2015.
“Whichever government comes in…I am looking for stability in excise duty and some reduction in taxes,” Kirloskar said. “We are an over-taxed industry.”
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By GlobalDataKirloskar declined to give Reuters a specific forecast for car sales growth this fiscal year but said he expected sales to rise “more than 0%”.
Car sales for fiscal 2013/14 fell 4.7%, SIAM data showed, after March sales fell 5.1%. Sales of trucks and buses, widely regarded as a barometer of the economy, declined about 20% over the year.
In February, the government cut factory gate duty on vehicles in its interim budget but that has yet to help boost sales.
Companies are waiting for the new government’s budget to see if the tax cut will continue or not.
To beat the slowdown, automakers including Hyundai and Nissan Motor have launched new compact cars to lure price-sensitive customers, Reuters noted.
