The Indian car market goes from strength to strength. Consumer demand grows despite rising prices. Society of Indian Automobile Manufacturers (SIAM) figures show that total domestic passenger car sales for April were 143,976, up on 103,227 year previous.

Maruti Suzuki leads the way

For the first time Maruti Suzuki sold over 100,000 vehicles (including vehicles for export) in May.

US majors also made ground but lag behind in unit sales. General Motors exceeded expectation with growth of over 60%, 8,225 units in real terms, and Ford posted May sales growth of 272%, or 8,080 vehicles.

Increased sector sales but falling profit

Increased competition is forcing automakers to launch newer versions of their vehicles or offer - at discount - more premium features to maintain sales growth. The number of cars launched over the last few years has intensified competition, reducing the average sales per model.

Manoj Mohja of Crisil Research says, "While total sales for cars has increased 14% annually in the past four years, the average unit sales per model has declined over 12% in the Indian market".

More auto investment to come

Despite pressures on profit margins, the sector is still expected to flourish. Estimates are that US$ 30 billion will be invested in India - the world's second fastest growing market - over the next four years. Good news considering government aims to increase the industry contribution to 10% of GDP, employing 25 million people by 2016 in the process.

International luxury marques seeing growth

The luxury end is also experiencing growth as international brands look to tap in to an unsaturated market. Mercedes Benz experienced 59% growth year-on-year, with sales of 381 units during May. Audi managed 65% growth during the same period with sales of 200 cars.

While unit sales are still small, luxury growth of 15% is expected this year and sales are expected to grow. Abdul Majeed, of PwC comments, "Although there are challenging factors like input costs pressures and hike in interest rates, the growth rates can be sustained."