The Hindu Business Line : Car sales zoom in January

While Maruti's January sales jumped by 30 per cent, Hyundai Motor India's sales registered 66 per cent growth to 17,035 units. Similarly, Toyota and General Motors too have had an upbeat January with the companies recording a 63 per cent and 163 per cent growth respectively in the month.

The reason? Car prices and interest rates on car loans appear to be on a consistent downward spiral, what with special discounts and freebies thrown in. In addition, the launch of several new models in the market has helped maintain consumer interest in the category.

Adds a Toyota official: "There is a pent-up demand in January as people usually buy their new car in the New Year. But there is also overall buoyancy in the market and demand is going up."

The compact car segment (consisting of cars such as the Hyundai Santro, and Maruti Zen) saw particularly good growth during the month. Market analysts point out that the bulk of the growth in passenger cars will continue to be driven by the compact car segment, despite cut-throat competition in the mid-size sedan segment, driving prices below the Rs 5 lakh level.

"This is because though mid-size cars are seeing good growth in the big cities, growth in the passenger car category is being driven by the smaller towns and upcountry areas where there is higher demand for small cars," says Mr Rakesh Jain, Managing Director of Delhi-based Gautam Motors.

Market watchers add that the high growth in January can also be attributed to the positive signals in the economy. In fact, the month has been particularly good not only for passenger car companies, but for commercial vehicle makers as well. Incidentally, sales of commercial vehicles are said to be an indication of economic growth.

Total sales of Tata Motors' passenger cars and commercial vehicles in January were up by 32 per cent. On the same note, sales of bus and truck makers Ashok Leyland and Eicher Motors grew by 30.4 per cent and 55 per cent respectively in the month.

Analysts, however, point out that though the overall indications are good, the rate of growth in vehicle sales may slow down in the next few months. "There may be a slowdown during the election month due to uncertainty. Another slowdown is expected nearer to the announcement of the full-fledged Union Budget as consumers will expect a decline in excise duty, leading to a reduction in car prices," says Mr Jain.