India’s car sales hit their highest ever level last month as customers bought more vehicles on concerns that the federal government may raise taxes on diesel vehicles in its budget for the next financial year.
Indian automakers sold 211,402 cars in February, data released by the Society of Indian Automobile Manufacturers (SIAM) showed, the biggest ever monthly total.
In addition, the economy will soon return to high growth, the government pledged Monday, as official data showed industrial output expanded at its fastest clip in seven months and car sales surged.
Asia’s third-largest economy grew by over 9% for several years in the past decade and the Congress-led government has targeted a return to 9% expansion in its latest five-year plan which starts in April 2012.
“The continued recovery is positive, but the crucial thing is to see what happens to sales in the months after the budget, should there be an increase in excise duty or other costs,” said Vineet Hetamasaria, auto analyst at PINC Research in Mumbai.
“These numbers should be seen from that perspective.”
According to IHS Automotive sales in India will peak at 4.88 million vehicles by 2016, a healthy increase from 2.91 million last year. The burgeoning market is expected to post sales of 6.73 by the end of the decade.
Japan will see demand rise to 4.51 million in 2016 from 4.13 million last year, when sales were held down by last year’s earthquake.
Japan had sales of 4.87 million vehicles in 2010. IHS forecasts Japan’s sales will reach 4.35 million in 2020.
Sales of trucks and buses in India, a key indicator of economic activity, rose 18.7% in February from a year previous to 76,891 vehicles, SIAM said. Motorcycle sales rose 8% to 838,193 vehicles.