Maruti Suzuki plans India expansion as car sales rise

India's car sales will accelerate this fiscal year as economic growth helps the country withstand a global slump in automobile demand, an industry group said, spurring Maruti Suzuki India Ltd. to increase investment.

Car sales are forecast to grow at least 10 percent in the year to March, double an April estimate for a 5 percent expansion, Dilip Chenoy, director general of the Society of Indian Automobile Manufacturers said in an interview in New Delhi today. The 13 carmakers in India sold 1.22 million cars last fiscal year.

Maruti Suzuki, maker of half the cars sold in the country, said today it's planning investments and Honda Motor Co. is boosting output to meet growing demand. General Motors Co. and Toyota Motor Corp. are among carmakers increasing bets on India, China and other emerging markets as sales in the U.S., Japan and Europe tumble.

"Sentiments have improved and pent-up demand is coming back," Chenoy said. "Interest rates now are better than before and the stimulus package by the government has also helped."

Indian economic growth may accelerate to as much as 7.75 percent this year as the U.S. economy shows signs of "bottoming out" and harvests benefit from monsoon rains, the finance ministry said July 2. The benchmark Sensex index has gained 63 percent this year.

China, Japan

China, Japan, and U.S. are among countries offering a mix of credits, tax breaks and subsidies to boost auto sales by getting consumers to trade-in old cars for newer, more fuel efficient models. China's passenger-vehicles sales rose 70.5 percent in July, the biggest gain since January 2006.

China surpassed the U.S. as the world's largest car market this year.

India's central bank injected about 5.6 trillion rupees into the economy, which together with government fiscal stimulus amounted to more than 12 percent of gross domestic product. The central bank kept borrowing costs unchanged in its last monetary policy statement on July 28.

Full story