New car sales are back on path. Car sales have improved in urban centres in July assist by cheaper loans enhanced consumer sentiment and better corporate results. It's a great good news for the auto industry as car sales had slipped nearly 10% in the past one year. New car sale grew by 12% last month in almost all major cities in India, which generally account for 85-90% of new cars sold in a year. The industry is also helped by high demands in semi-urban and rural marketplace in the past six months.



Leading car manufacturers like Suzuki India, Kirloskar Motors have seen a rush forward in customer footfalls at their dealerships. In July last year saw a fall in car sale by 1.7% to 87 , 724 units , after remaining in the positive region for over two years. Economic slowdown in July-November 2008 reasoned a big drop in demand for new cars as customers delayed their buying decisions due to job insecurity, a slowing economy and high interest rates. Car sales remained slow-moving till the first quarter of this financial year , rising only 4% to 4.16 lakh units in the period.

“July marks the turnaround in the car marketplace with 20 major cities posting a 40% increase in sales for our models , ” said Mayank Pareek , executive officer for advertising and sales at Maruti Suzuki. Throughout April-June , the combined sales of Maruti Suzuki grew at a slower rate of 5-10% in these cities , though overall sales rose from 10% to 1.97 lakh cars.

According to car manufacturing companies cheaper loans, improved consumer sentiment and better corporate results should be accredited for the urban turnaround. Also increased loan by public sector banks at lower interest rates encouraged customers to buy new cars. The numbers of new cars sold through loans too have gone up to approximately 70% in the past few months. The continuous turn down in interest rates has improved demand in urban markets and study for new cars have shot up significantly.”