Robust economic growth to boost Indian car market: study

Friday, 26 March 2004, 08:00 Hrs
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NEW DELHI: India's fast-growing car market is likely to get further boost in the short to medium term on robust economic growth in the current fiscal year and spiralling consumer spending, a study said Thursday.

Price discounts and introduction of new cars as well as variants coupled with easy availability of low cost finance have led the strong growth in the domestic car market in the last one year.

"The demand for cars in the domestic market is expected to be healthy in the short term, given the improvement in macro-economic fundamentals and expected improvement in the personal disposable incomes," said the credit rating firm ICRA Ltd in its study.

"Moreover, with a host of model launches planned, the competition is likely to intensify further in the domestic market for passenger cars," said the report.

During the nine months of the fiscal year 2003-04, car sales in India touched 484,029 units, representing a growth of 27 percent over the same period in previous years, said ICRA.

"Easy availability of finance at relatively lower interest rates and price discounts as well as freebies offered by players contributed to the strong sales growth," it added.

The study said car exports from India were also buoyant in the April-December period of fiscal 2003-04, witnessing a whopping growth of 73 percent over the same period in the previous fiscal year.

ICRA, however, warned that the "increased competitive intensity" and increasing cost of certain inputs might pressurise the margins of the domestic automobile players.

"Their ability to enhance productivity and withstand cost pressures may be critical for improvement in their financial performance."

India's car market has come a long way in recent years. From the economically priced Maruti-Suzuki 800 compact cars to the Maybach, the new car craze in India is unmistakable.

Experts say car sales in India would touch 700,000 units in the fiscal year ending March 31, registering a growth of nearly 30 percent over the previous year as the benefits of an economic boom percolates down to all segments of society.

India is set to be one of the fastest-growing economies this year, perhaps surpassed only by China. India's October-December gross domestic product increased 8.4 percent from its previous year's level.

Source: IANS
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