India's automobile sales and production rose in June from a month earlier, supported by changes in government policy that lowered fuel and steel costs.
Sales rose by 5pc in June from a month earlier to 1.61mn units, while output increased by 6pc from the previous month to 2.08mn units, according to the Society of Indian Automobile Manufacturers (Siam). Both sales and production were higher in June from a year earlier, when economic activity was hit by the second wave of the Covid-19 pandemic.
Sales during April-June were at 4.94mn units, while output was at 6.32mn units, Siam said. Passenger vehicle sales rose by 10pc in June from a month earlier to 275,788 units. Two-wheeler sales rose by 4pc to 1.3mn units.
The reduction of central excise duty on petrol and diesel and imposition of export duty on steel has eased inflationary pressures, Siam director-general Rajesh Menon said. Similar government support to lower compressed natural gas (CNG) prices would further help the sector, he added.
The Indian government's move to cut central taxes on motor fuels have brought down energy prices, while an imposition of 15pc export tax on steel has sharply lowered the raw material's prices.
India's domestic hot rolled coil (HRC) prices have dropped by 14pc since the export tax came into effect in late May, and were at Rs 59,500/t on 8 July. The Indian steel industry receives 8-10pc of its demand from the automobile sector.
Automobile dealers sold 1.55mn units in June, lower by 6pc from a month earlier, India's Federation of Automobile Dealers Associations (Fada) data show.
Easing availability of semi-conductors will reduce the waiting period in the passenger vehicle segment, Fada said. But the association continues to see a lag in segment recovery because of high inflation and poor market sentiment in rural India.
