According to data issued by the Society of Indian Automobile Manufacturers (SIAM), Indians purchased 1.53 million cars over the last fiscal year, up from 1.22 million units the year prior.
Sugato Sen, a senior director at SIAM, says it's the biggest percentage gain since a 29 per cent growth was recorded in the fiscal year ending March 2004.
President of SIAM, Pawan Goenka, reiterated those findings, saying India's car sales are likely to grow between 10 and 14 per cent in this financial year, and that all automobile sales in India - which include motorcycles, cars, buses and trucks - have risen by 26 per cent over the past year to 12.29 million units.
"Typically, if we look at the auto industry in India over a 10-year period, we have grown 10 to 14 per cent," said Mr Goenka."Last year (ended March 31, 2010) was exceptionally high because of a poor performance in fiscal year 2008-09, when there was no growth."Over the last two years, we have grown 10 to 14 per cent cumulatively. We would like to see a higher growth, but this is what we expect for fiscal year 2010-11 as well."
But industry experts warn the growth is likely to plateau towards the middle of this year as a series of stimulus steps implemented by India's federal government are gradually withdrawn. This fact, coupled with the introduction of a new double digit excise tax (which was introduced on February 26), could see the boom times come to an abrupt end as dealerships face little option but to pass on the added tax to their customers.
Also, with inflation hovering at 9.89 per cent in February, the highest in 16 months, fears of further rate hikes by the central bank are on the rise. India's central bank increased its key interest rates last month, and is expected to announce a further raise by the end of April.
Sanjay Doshi, a Mumbai-based analyst with Macquarie Research, said recently that volume growth is expected to slow this fiscal year "as various fiscal and monetary stimuli are gradually withdrawn and the pent-up demand effect wears off."
Strong sellers over the past financial year include Maruti Suzuki, India's biggest car maker by sales volume, on 765,526 units (up 20 per cent) and Korean manufacturer Hyundai on 314,967 sales (up 29 per cent). Third place goes to local manufacturer Tata with 201,399 registered sales (up 26 per cent).