NEW DELHI -- Indian domestic passenger car sales jumped 28 percent in April from the same month a year ago boosted by a tax cut two months ago and last year's lower base, figures released on Wednesday showed.
The Society of Indian Automobile Manufacturers (SIAM) said in a statement car sales in April, the first month of 2003/04, jumped to 42,506 units from 33,195 units in the year-ago month.
The Indian budget in February cut excise duty or production tax on cars and utility vehicles by eight percentage points to 24 percent, prompting all carmakers to cut prices by about five percent. The price drops boosted sales by 15.2 percent in April.
"The tax cut is still playing out and year-on-year growth looks a little better since car sales weren't very good in the first quarter last year," S. Krishnakumar, vice-president at Madras-based Anush Shares and Securities, told Reuters.
Indian car sales fell in April and May last year owing to a slowing domestic and global economy and the impact of the country's worst religious violence in a decade in western Gujarat state.
Krishnakumar said he expected car sales in the year to March 2004 to rise by five to seven percent.
SIAM's figures showed domestic car sales of market leader Maruti Udyog Ltd, a unit of Japan's Suzuki Motor Corp, jumped 37.5 percent in the month while sales at the local unit of Hyundai Motor Co., the No 2 company, rose 26.6 percent.
New car sales in India rose 6.4 percent in the past year to March to 541,738 units as manufacturers cut prices, offered discounts and a host of freebies to kickstart demand.
Falling interest rates that lower monthly instalments on hire purchase schemes also helped demand. Nearly 70 percent of new cars bought use consumer financing.
The SIAM data showed domestic sales of motorcycles grew 6.1 percent to 303,792 units from last year's 286,313 units after a nearly 30 percent rise in the previous year to March.
But growth in the world's second-biggest motorcycle market continuously slowed in the past year -- from 52.4 percent in the first quarter to 37.6 percent in the second, 29.3 percent in the third and 9.3 percent in the fourth.
Analysts say last year's drought, India's worst in more than a decade, hurt farm incomes and hit rural sales although demand in urban markets has remained robust.