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Publication: The Economic Times Mumbai;Date: Sep 10, 2010;Section: Business Of Brands;Page: 4

August Car Show

Car sales soar 33% to a record high in August on the back of new launches,
lower interest rates & booming economy
Our Bureau NEW DELHI

INDIA’S car sales vroomed to an all-time high of 33% in August on lower borrowing costs, launch of new models and booming
economy, said auto industry body SIAM on Thursday. With festive season round the corner, the demand in the Asia’s third largest auto
market is set to peak further. But the country has to do a lot of catching up with China as car sales in the world’s most populous country
jumped to 59.3% in August.

Total car sales in the April-August period stood at 7.53 lakh, up 34% over the first five months of the fiscal ended March 2010. Society
of Indian Automobile Manufacturers (SIAM) had previously projected car sales to rise 12% to 17.14 lakh vehicles in FY 2011. Demand for
automobiles is also led by growing disposable income as high economic growth has cheered job market and brought back increments and
bonuses for the employees.

"The industry will overshoot our estimates due to several factors such as easy financing and new car models. Other economic factors
are also likely to influence the growth," said Vishnu Mathur, director general, SIAM. However, he cautioned that the industry needs to look
out for performance in the second half as September-March period last fiscal had recorded strong sales and the large base could yet slow
down growth rate for the full year.

SIAM had projected 9-10% growth for sales of two wheeler sales in FY’11, 7-8% increase for three wheelers and a much higher
17-18% growth for commercial vehicles. The actual growth rate for the respective categories for the April-August period has been 2-3
times the annual forecast with sales of two wheelers pegged at 27%, three wheelers at 20% and commercial vehicles, a category seen as
a barometer of country’s industrial activity, growing as high as 45%.

Some of those tracking the sector have already revised their annual estimates. Manoj Mohta, head, Crisil Research, said auto industry
is performing better than expectations and his research unit has pushed up sales forecast for the full fiscal to 16-18% from the earlier
12-14%. "The automobile industry is witnessing buoyant growth, thanks to positive consumer sentiments along with robust economic
indicators. In FY 2010-11, we expect all automobile segments to register healthy growth rates, even as the pace of growth moderates
over the next few quarters due to a higher base," he said.

But analysts say higher growth may not make a case for a wider re-rating of the stocks in the sector as brokerages had already
factored in a higher growth rate than SIAM’s conservative projection. BSE Auto index rose 0.19% on Thursday, compared with 0.7% in the
30-stock benchmark Sensex.

While country’s largest carmaker, Maruti Suzuki, sold 92,647 cars in August, up 32% over the year ago period, Tata Motors’ sales
grew 40% to 30,312 units. Other carmakers such as Ford India and Volkswagen, who launched new products in the small car segment,
reported multi-fold increase in sales. Market leader in two-wheelers, Hero Honda, saw a jump of 2% to 4.13 lakh units.

The only blip in the auto growth story is exports. Overseas shipment of cars declined 7.21% in August due to slowdown in international
markets, especially Europe, as many countries withdrew incentive for buying new fuel-efficient smaller cars. Domestic automakers, who
have been struggling to keep up with local demand, have also shifted focus and are using capacities meant for exports to make products
for domestic market.

The largest car exporter, Hyundai saw overseas shipments decline 12% to 22,035 units, while Maruti’s exports dipped 18.4% to 11,972
units in August.

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