India Car Sales Growth at 10 Year High

India's car sales rose 39.5 per cent in April over last year, the biggest jump in 10 years, but rising costs are starting to drag on India's auto explosion. April car sales hit 143,976, up from 103,227 units a year earlier. Overall passenger and commercial vehicle sales were 231,267 in April, up 39.4 per cent from 165,868 vehicles a year earlier.

India's sustained auto boom has attracted auto majors from across the globe, including Ford, Nissan and GM, who are all trying to build smaller, more affordable vehicles to tap growing appetite for cars in India.

Despite impressive annualized gains, 13.2 percent fewer vehicles were sold in April than in March, when sales hit 266,471 vehicles. "There should not be euphoria," said Vishnu Mathur, the new director general of the Society of Indian Automobile Manufacturers. He added, "We expect double digit growth happening, but in more moderate quantities."

Auto sales last April were unusually low due to the global recession. Now commodity prices are likely to continue to rise as the global economy recovers, despite efforts by the Indian government to contain costs.

Most Indian auto majors have already passed higher costs, from commodities used in manufacturing, a change in emissions norms and a tax hike, on to consumers. In spite of the higher costs, strong consumer confidence, available credit and new car launches like the Indigo Manza from Tata Motors and the Eeco van from Maruti Suzuki helped sales.

Maruti again dominated car sales, accounting for 47.7 per cent of all cars sold in India in April. Tata reported 52.5 per cent total volume growth, driven by a 63.1 per cent surge in medium and heavy commercial vehicle sales.

Overall commercial vehicle sales jumped 64.5 per cent in April to 49,086 vehicles, a reflection of India's rebounding economy and priority spending on infrastructure. Vehicle exports rose 34.2 per cent to 41,781, data from the trade group showed.