Car sales grew 18% in April, the fastest rate in the last 30 months.
However, challenges faced by the rural economy due to rain-related problems threaten to slow down the turnaround that comes after a three-year lull. The impact of unseasonal rains has already punctured the demand for the volume-heavy motorcycles, and a subnormal monsoon can hit the demand for cars too. And, high interest rates can also affect the recovery .
Car sales volumes in April were at 1.6 lakh units, higher than 1.35 lakh units sold in the same month last year.However, it's still a far cry from the 2.33 lakh units sold at the peak of the industry in March 2012, according to numbers provided by industry body Society of Indian Automobile Manufacturers (Siam).
The new models launched by companies have also resulted in creating de mand. These include Honda's Mobilio, Tata's Bolt and Zest, Maruti's Ciaz and Hyundai's Elite i20.
While car sales are stabilizing, motorcycle segment is a concern. In April, motorcycle sales were down 3% at 8.8 lakh units against 9 lakh units in the same month of the previous year. For the motorcycle segment, this is the seventh straight month of decline in sales.
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