India emerges as world's No. 2 in car sales in 2010

India emerged as the second fastest growing car market in the world in 2010, next only to China, as car sales surged by 31% during the year to 1.9 million units. Sales of two wheelers crossed 10 million units during the year, a first, with all major two-wheeler manufacturers registering high double digit growth.

According to the data released by the Society of Indian Automobile Manufacturers (SIAM) on Tuesday, the automotive industry signed off the decade in style as India rose through the pecking order to emerge as the 7th largest automobile market in the world. In 2000, it was at the 15th position.

Passenger vehicle sales, which include cars, multi utility vehicles and sports utility vehicles, grew 31.3% last year to 2.4 million against 1.8 million in 2009.

During the decade, sales have grown an average 24% every year, but the industry believes growth will be moderated in the near future.

While a growing economy and higher expendable cash in the hands of the young population have spurred the industry, part of this growth has also been aided by lowering of excise duties by the government throughout the decade, which has ensured that prices of cars and two wheelers have remained almost stagnant. SIAM said there was still a case for not increasing the duties, the high growth notwithstanding.

'We are seeing interest rates firm up and it is already as high as 14.5% on passenger vehicles and 18% on commericial vehicles. It is a worry,' said Pawan Goenka, president, SIAM.

During December 2010, domestic passenger car sales jumped 28.9% to 148,681 units, compared to 115,337 units in the same month in 2009. Total two-wheeler sales increased by 31% to 10,06,545 units, while sales of commercial vehicles jumped by 27.3% to 61,880 units. Total sales of vehicles across categories registered a growth of 30.5% to 13,05,872 units in December 2010.