Narendra Modi effect Car sales bounce back after two years in May

Written by fe Bureau | New Delhi | Updated: Jun 3 2014, 01:18am hrs
MarutiAfter declining for almost two years, car sales strongly bounced back in May.
After declining for almost two years, car sales strongly bounced back in May with YoY growth in the 8-10% range, as per industry estimates. Experts said that while the low base of May last year has been a factor aiding growth, consumer sentiments are already improving on the back of hopes that the Narendra Modi-led NDA government at the Centre will revive economic growth after a prolonged slump. Most manufacturers have said that enquiries at dealerships are at an all-time high, with strong revival expected from June onwards.

Newly launched models from Maruti Suzuki, Honda and Ford led the growth, with petrol cars more in demand than diesel-powered utility vehicles (UV). In fact, UV specialist Mahindra & Mahindra was one of the few to see declining sales in the month.

Two-wheelers sales, which have picked up over the past few months on the back of strong rural demand after good monsoons, continued the strong show in May. Hero, Bajaj, Honda and TVS, all saw growth in demand, with most companies now operating their factories at optimum levels to cater to the high demand.

In an indication of improving economic activity that could help boost commercial vehicle demand in the near future, freight rates on key trunk routes in May also went up 4-5%, independent agency IFTRT said.