* Jan car sales rise a third to 145,905 units

Cyclical Consumer Goods

* Feb sales seen strong on expectations of tax hikes

* High commodity prices, rate rises could be spoilers (Adds quotes, details, background)

by C.J. Kuncheria

NEW DELHI, Feb 9 (Reuters) – Indian monthly car salestouched a record high in January as customers bought vehiclesahead of possible tax hikes in the Feb. 26 federal budget andexperts said the momentum would continue until then.

Market watchers expect Finance Minister Pranab Mukherjee tobegin reversing cuts in factory gate taxes, which wouldincrease prices of everything from soaps to cars, when hepresents the budget for the 2010/11 fiscal year (April-March).

such expectations would give a more-than-normal lift toFebruary sales, a month when consumer enthusiasm generallywanes in anticipation of tax cuts and lower prices, analystssaid.

“It’s a concern,” said Surjit Arora, autos analyst atbrokerage Prabhudas Lilladher. “In February, the trend shouldcontinue,” he added, as people were advancing their purchases.

in January, firms sold 145,905 cars, the highest-evermonthly figure, the Society of Indian Automobile Manufacturers(SIAM) said. they had sold 110,300 units a year ago.

India, along with the world’s top car market China, is abright spot for automakers, with SIAM forecasting vehicle salesgrowth of 12-13 percent for the fiscal year commencing on April1.

between April 2009 and January 2010, vehicle sales haveexpanded 24 percent to nearly 10 million units, on a low baseand helped by tax cuts and softening loan rates.

making India more attractive to automakers is its domesticdemand, coming from a large affluent population that isloosening its purse-strings, unlike in mature markets wheregovernment incentives have cushioned sales.

Sales in the United States rose an annual 6 percent inJanuary, while Japanese sales were up 37 percent. Chinese salescontinued their robust expansion and scrappage incentives gaveEuropean markets strong growth. [ID:nN0259282] [ID:nLDE6100ZG]

in 2009, the Indian auto index .BSEAUTO trebled in value,outpacing the Mumbai market’s .BSESN 81 percent rise. so farin 2010, the sector index has declined slightly less than thebroader market.

but analysts and industry officials are concerned aboutrising commodity prices that threaten to shave off profitmargins.

any hike in interest rates could dampen sentiment as autoloans would get pricier, they said.

The Indian central bank is seen raising its key lendingrate by April, after it moved to tighten liquidity byincreasing banks’ reserve requirements.[ID:nSGE60S0GY]

“All these factors should start impacting from the firstquarter of fiscal 2010/11,” Prabhudas’ Arora said.

Sales of trucks and buses more than doubled to 110,300units, reflecting bustling economic activity. Motorcycle salesrose 43.7 percent to 650,633 units, SIAM said. (Editing by Malini Menon)