Anticipation of a price hike after the budget pushed car sales in India in February this year.
A total of 153,845 vehicles were sold as their sales went up by 33 percent in February, according to data released by the Society of Indian Automobile Manufacturers (SIAM) Monday. Car manufacturers sold 115,505 units in the year-ago period.
Sale of commercial vehicles, a key indicator of economic activity, rose a whopping 87 percent during the month at 58,024 units.
Motorcycle sales, which constitute bulk of the two-wheeler segment, also were up by 30.7 percent at 642,419 units compared to 491,451 units in the corresponding month last year.
Auto stocks reacted positively to the news and were among the major gainers on the Bombay Stock Exchange.
During the April-February period, sales of passenger vehicles increased 26.13 percent and that of commercial vehicles rose 35.2 percent.
Finance Minister Pranab Mukherjee had announced a two percent hike in excise tax on prices of large cars, and sports and multi-utility vehicles in the general budget presented on february 26.
The government had offered excise duty relief to car makers as a stimulus in 2008 when auto sales dropped following a slowdown in the economy after recession hit the world.
The excise duty was slashed on two-wheelers (from 10 percent to 8 percent), small cars (from 12 percent to 8 percent) and big cars (from 24 percent to 20 percent).
Major car manufacturers have raised prices of cars by up to Rs.25,000 reacting to the increase in central excise duty, which is now at 10 percent.
Also, prospective buyers may be in for another round of price hike as the country is set to adopt new emission norms compliant auto fuel, Euro IV, by April 1 in 13 metro cities.