Car sales up 13 per cent; fears of post-Budget price hike

Car sales in the month of Feb have witnessed a rise of 13.11 per cent, owing to fear of price hike post budget this year. The sales figure saw an acute growth with 2.11 lacs units sold this year against the 1.86 lacs figure of last year.

According to figures released by the Society of Indian Automobile Manufacturers (SIAM), the steep rise in sales figure was a result of auto giants such as Maruti, Mahindra & Mahindra, Hyundai And Tata Motors reporting an astonishing annual sales growth. Where on one hand, the American automakers, General Motors and Ford, and German automaker Volkswagen saw a decline in numbers, on the other hand, the Japanese automakers, Honda and Toyota reported growth.

“People are expecting increase in car prices after the Budget as the government may roll back two per cent excise concession given as stimulus during the 2008-09 slowdown.” SIAM Director General Vishnu Mathur said in a statement.

Car sales up 13 per cent; fears of post-Budget price hike

However, analysts and industry experts suggest that the acute and sudden growth in the auto industry may see a devastating drop post Budget this year. With auto majors developing the diesel variants of volume-driven segment like hatchbacks and sedans, the duty hike announced in the Budget plan may turn out to be a nightmare for them automakers. With rising petrol prices and a huge margin between petrol and diesel price, the demand for diesel cars has seen a rapid growth. And the additional subsidy on diesel may just turn the tables for diesel powered cars.

Recently witnessed price hike was of Ford, owing to the rise in input cost, and the new budget plan may further skyrocket the input costs and implied price tag. With dropped petrol price pre Budget, companies resorted to heavy discounts and sales offers during the last month to improve its sales figure.

“The sales were not on expected lines as the market continues to be sluggish. High interest rates, hike in fuel prices, commodity prices, growing inflation, and negative market sentiments continue to put lot of pressure on the automobile market,” P Balendran, Vice President at General Motors India, said.

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