A cursory glance at some of the Newspapers in India would make any objective observer of the Indian economy marvel at the growth rates that it seems to be achieving over the past couple of months. Little wonder that we have the middle classes being overawed by the 'India story' and even the normally skeptical members of the middle classes frown on the naysayers, who may question the resilience of the Indian economy -especially its supposed recover from the global meltdown.
Evidence of this resilience trickles in every other day, the most important being the rise in the stock market indices. The latest evidence of India's recovery to high growth tragectory being the exceptionally large jump in car sales. Such statistical 'evidence' has led to a remarkable complacency in large sections, the last time such complacency was witnessed in India was during January-February 2008 (and we know the results of that).
We decided to look at the car sales statistics from a different part of the room that is slightly different from the viewing angle of the government and the media. We believe that spending in the economy is dynamic and month-on-month statistics are more important that a year-on-year comparison. Only then will, we believe get a more wholesome picture.One only needs to look at the statistics released by the Society of Indian Automobile Manufactures (SIAM) on its website to be misled into the soundness of the continuous growth of the Indian Auto Industry. This not to deny that the year-on-year comparisions are not required. On the contrary, we believe that a year-on-year comparision while important (especially for long-term trends), tells us only a part of the story. So we compiled the statistics on a month-on-month basis. A cursory glance at the statistics would make even the novice investor cautious and would probably leave them with more questions about why analysts are being economic with the truth.
A note about the car sales is in order, if we were not to draw the same criticism about being economic with the truth. There are some months that are normally considered lean months for sales. Two such months are March (when banks are more reluctant to give loans due to year end considerations) and December because the end of year and onset of new year will reduce the re-sale value due to year-end considerations. The festival months (September-October) normally see higher than normal sales as these months are the preferred (auspicious) months for the more religious buyers.
| Month | 2009 Car sales | 2008 Car Sales |
| January | 110,212 | 113,894 |
| February | 115,386 | 94,757 |
| March | 128,074 | 114,145 |
| April | 102,899 | 98,752 |
| May | 113,490 | 110,745 |
| June | 107,531 | 99,741 |
| July | 115,067 | 87,901 |
| August | 120,699 | 96,082 |
| September | 129,683 | 107,517 |
| October | 168,043 | 126,276 |
| November | 133,687 | 83,121 |
| December | 119,930 | 80,402 |
The above statistics clearly indicate that while the sales are better than the previous year (when there was a near economic paralysis with the banks refusing to lend) the sales are not as good as we are being told. This is because of two reasons. The discounts have increased substantially this year and more importantly, interest rates are at historically low levels. If we were to exclude the festival month of October, then the sales should (at least privately) be making the policy makers sleepless nights. This is probably the reason why the Finance Minister has been categorically stating that it is too early to withdraw the stimulus.
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