Monday, April 2, 2012

Is fear of higher prices driving auto car sales in India?

Car companies have seen stellar sales in March as demand for new models and diesel variants drove purchases. Fear of a price hike post the Union Budget also drove sales. Companies like Tata Motors, Mahindra & Mahindra and Honda Siel saw their highest ever monthly sales in March 2012. Well, customers seem to have made the right call. They prefer not to defer their purchases due to the fear of higher car prices in the coming months.

The Union Budget has proposed an increase in excise duty, registration tax and value-added tax. These would add to the cost of the cars. As a result, higher prices are expected to deter auto demand in coming months. Most auto makers have expressed their discontent over the government's decision as they know that it will impact sales going forward. But to no avail. However, they may see some relief when interest rates finally cool off.

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