First-Quarter Car Sales Rose 11% in India

Demand for passenger vehicles in India grew 11% to 760,000 units in January-March for an annualized sales pace of 3.4 million units, says market analysts LMC Automotive.

Car deliveries in March totaled 269,000 units, up 11% year-on-year. The sales rate for the month climbed to nearly 3.5 million units from 3.4 million rates in January and February. Light commercial vehicle sales advanced 4% to 57,000 units in March and were up 6% to 153,000 for the first quarter.

The market has been bolstered by pent-up demand, new models and a restabilized supply of cash in the Indian economy, according to LMC. But the outlook for the second half of calendar 2017 is uncertain.

It isn’t clear how new-car sales will be affected by India’s plan to impose a nationwide goods and services tax on July 1. LMC says the move—a bid to rationalize the country’s tax structure—could hike consumer sentiment and spur sales. But the new tax may cause enough confusion among would-be buyers to have the opposite effect.

Another unknown is India’s plan to implement stronger safety standards for new cars in October-December. LMC says the higher cost of compliance could hurt the market for entry-level minicars.