India Automakers See 12% Sales Jump Driven by More Rural Demand

  • Passenger vehicle sales may grow at fastest pace in 6 years
  • Drop in sales last month `temporary blip,' auto group says

India’s automakers are forecasting annual sales to grow at the fastest pace in six years, as rural consumers build wealth and step up purchases of cars and sport utility vehicles.

Deliveries may gain as much as 12 percent in the financial year starting in April, Vishnu Mathur, director general of the Society of Indian Automobile Manufacturers, said Friday in New Delhi. Sales in the year ending in March are on pace to rise about 8 percent.

Buyers in rural India purchase about 35 percent of cars, SUVs and vans sold in the country. Mathur expects purchases will rise along with rural incomes. While automakers such as Maruti Suzuki India Ltd. and Mahindra & Mahindra Ltd. already each get about a third of their sales volume outside urban areas, Hyundai Motor Co. and others are adding dealerships in the countryside as farmers boost their earnings.

“Agricultural growth depends on the monsoon, and chances are that next monsoon will be better,” Mathur said. “With that there will be an improvement in the purchasing power and income levels.”

Good rains during the annual June-September monsoon season play a key role in driving demand as more than half of farmlands in the country depend on rain-fed irrigation.

The industry group’s forecast follows the first decline in passenger-car deliveries in 15 months in January, which Mathur called a “temporary blip.” Sales of cars, excluding sport utility vehicles and vans, fell 0.7 percent to 168,303 units, the group said.

Before it's here, it's on the Bloomberg Terminal.