Car sales to grow 14%

Passenger cars sales in India are expected to clock a 14 per cent growth this financial year on higher demand for compact and mid-sized cars, economic think-tank CMIE has forecasted.

"Compact and mid-sized cars are the fastest-growing categories. These two segments will drive the car market in 2005-06," Centre for Monitoring Indian Economy said in its latest report.

It said even as the cumulative growth in car sales was 7.8 per cent up to the first quarter ending June 30, the two segments will push sales in the remaining part of the year.

CMIE said the next 1-2 years would see the entry of several foreign companies in the small car category, which is the volume segment.

"Toyota Motors, along with its subsidiary Daihatsu, plans to start making small cars in India by 2007. General Motors will launch a small car in 2006, besides launching its compact car 'Chevy Aveo' this year," it said, highlighting the positive factors for the market.

Also, it said that Czech automaker Skoda Auto plans to roll out a high-end compact car and Tata Motors is likely to roll out its much-awaited ambitious Rs 1 lakh car in the next three years.

"Increasingly, many global automakers are choosing to have their manufacturing operations in India," CMIE said, pointing out the plans of BMW and Volkswagen for India.

BMW and Volkswagen are looking at setting up manufacturing facilities in the country.