India Car Sales Rise Most in 5 Years as Economy Grows

Dec. 8 (Bloomberg) -- India’s passenger car sales rose the most in more than five years in November as cheaper loan rates and economic expansion lifted demand for Maruti Suzuki India Ltd. hatchbacks and Tata Motors Ltd.’s Nano.

Sales totaled 133,687 units in November, 61 percent more than the 83,121 sold a year earlier, the Society of Indian Automobile Manufacturers said in a statement in New Delhi today. That was the biggest surge since February 2004, according to data compiled by Bloomberg.

General Motors Co., Hyundai Motor Co. and Volkswagen AG have boosted investment in China and India as the world’s two most populous nations withstand a slump in global auto sales on government support and economic growth. China, due to report its November auto sales data today, is poised to surpass the U.S. as the world’s largest auto market this year.

“India and China are the two hottest auto markets in the world and no one can afford to ignore them,” said Deepesh Rathore, a New Delhi-based analyst at industry consultant IHS Global Insight Inc. “Anyone who isn’t strong in India will try to emerge a key player as the growth here is sustainable in the long term.”

China Demand

India’s economy expanded at the fastest pace in 1 1/2 years in the quarter ended September, helped by record-low interest rates and an economic stimulus. GM and Toyota Motor Corp. are among carmakers increasing bets on India, China and other emerging markets as sales in the U.S., Japan and Europe tumble.

Sales of trucks and buses jumped 98 percent in November from a year earlier to 40,847 while motorcycle and scooter sales gained 39 percent to 790,613, according to today’s statement.

Gross domestic product grew 7.9 percent in India in the last quarter, helped by the central bank holding its key reverse repurchase rate at a record-low 3.25 percent since April. Government spending and tax cuts took the value of stimulus measures to 12 percent of GDP.

China, Japan, and the U.S. are among countries that offered a mix of credits, tax breaks and subsidies to boost auto sales by getting consumers to trade-in old cars for newer, more fuel efficient models.

SAIC Motor Corp., China’s biggest automaker, said earlier today its November sales rose 91 percent to 252,190 units, according to a filing to Shanghai’s stock exchange. Sales for the first 11 months of the year rose 54 percent to 2.44 million units, according to the statement.

Middle Class

The automaker last week formed a venture with GM, with an investment of $650 million, to enter India.

India’s car sales are forecast to grow at least 10 percent in the year to March, the group of all vehicle makers in the country predicted in August. The 13 carmakers in India sold 1.22 million cars in the fiscal year ended March.

Sales may reach 3 million units annually by 2015, helped by new models such as the Nano, the world’s cheapest car, and higher incomes among a middle class of about 50 million people, according to a 2006 government forecast. The demand has prompted carmakers including Ford Motor Co. and Volkswagen AG to build factories and introduce new models in India, Asia’s fourth- biggest automotive market.