Saturday, August 02, 2014
By Kamal Swami
Economy turning around, witnesses growth in car sales
Passenger car sales rose for the third month in July, yet another indicator the economy may finally be in turnaround mode after having slumped to less than 5% growth in the past two years. Carmakers announced sales numbers for last month as India's manufacturing activity jumped to a 17-month high on a surge in new orders. The HSBC Manufacturing Purchasing Managers' Index rose to 53 in July from 51.5 in June. Other bright spots include the core sector expanding at 7.3% in June and exports advancing 10.2% in the same month.
Meanwhile, monsoon worries have eased a little with rain strengthening in parts of the country of late. The developments will be welcomed by the Narendra Modi government since reviving the economy and generating jobs are among its key objectives. Finance Minister Arun Jaitley's July 10 budget contained several measures aimed at freeing up the economy and boosting manufacturing and thereby employment. Tax cuts persuaded customers to buy new cars and the momentum is likely to be maintained with the launch of two-dozen models in the upcoming festive season.
Carmakers said strong sales for the past three months signal a revival in the automobile market after a two-year decline. Sales rose as interest rates, inflation and currency levels stabilised, reviving consumer sentiment, industry executives said. The brightest star in the entire pack was market leader Maruti Suzuki which reported a 22% increase in total sales to 1,01,380 units from 83,299 in the year earlier. Domestic sales rose 20% to 90,093 from 75,145. his was led by the compact segment — Swift, Estilo, Ritz — that rose 8% to 25,156 units. Sales of compact sedan DZire rose 22% to 18,634 units from 15,249 units. Maruti's exports posted the fiscal's smartest recovery with a 38% jump to 11,287 units last month.
Read complete story at Economic Times.