Car sales back in the green after 2 months

Domestic car sales grew by 3.08% in May, snapping a two-month long decline, as a stable government at the centre raised expectations among consumers of better times ahead. A weak monsoon as predicted by the met office however may well make this revival a shortlived one.

Passenger car sales in May stood at 148,577 units against 144,132 units in the same month last year. Sales had fallen by 5.08% and 10.15% in March and April respectively. Sales of MUVs and SUVs also posted a 4.56% growth to 44,267 units.

"The footfalls are now converting into sales," said Vishnu Mathur, director, Society of Indian Automobile Manufacturers (SIAM). "Formation of a stable government at the centre, coupled with reduction in cost of cars due to cut in excise duty, has brought back positive sentiments. A bad monsoon however would certainly mean some negative impact."

The industry is hoping the new government would retain the excise duty cut offered by its predecessor when it presents the budget early next month. In the interim budget, excise duty on small cars, scooters, motorcycles and commercial vehicles was cut to 8% from 12%. Duty on SUVs was slashed to 24% from 30%, while on large cars it was reduced to 24% from 27% and on mid-sized cars to 20% from 24%.