NEW DELHI -- India's domestic new car sales rose 31.1 percent on the year to a monthly record in January, as strong economic growth and interest rates near three-decade lows spurred a spending boom in Asia's third largest economy.
The Society of Indian Automobile Manufacturers (SIAM) said in a statement on Friday that 11 companies sold a total 71,875 cars in the domestic market in January, the highest monthly sales on record and up from 54,813 a year ago.
Sales in April-January, the first 10 months of the fiscal year to March, rose 27.4 percent to 555,904 units from 436,275 in the first 10 months of the previous fiscal year.
Car sales have surged since last March, after the government cut production tax to 24 percent from 32 percent, making cars about five percent cheaper in the price-sensitive market.
Robust economic growth of 8.1 percent forecast for fiscal year 2003/04 -- which makes India one of the world's fastest growing economies -- has also fuelled car sales.
Nearly 70 percent of new car buyers made use of consumer finance schemes and cheap interest keeps monthly instalments low.
Discounts and freebies offered by manufacturers in a hotly competitive market beset with excess capacity have also helped boost sales, as has the launch of new models, analysts said.
Domestic car sales of market leader Maruti Udyog Ltd., rose 36 percent in January to 38,140 units, according to the data.
Maruti, 54.2 percent owned by Japan's Suzuki Motor Corp. has a dominant 51.5 percent share of the Indian car market with its small, low-priced cars.
Sales at second-ranked Hyundai Motor Co. rose 24.5 percent to 12,546 units, while sales at Tata Motors Ltd., the industry's No. 3 firm, rose by 11.6 percent to 11,084 units.
Analysts expect car sales in India to grow at an average annual rate of 10 percent this decade, helped by rising income and low penetration. Only four of every 1,000 people own a car in the mostly agriculture-dependent country.
SIAM's data showed sales of commercial vehicles, or trucks and buses combined, surged 35.6 percent to 25,141 units in the past month and by 36.2 percent in April-January to 203,269 units.
Truck sales in India have soared in the past two years, as the construction of a national network of highways has boosted transportation needs. A shift in demand to large, multi-axle trucks from older two-axle vehicles has also lifted sales.