New car sales in India declined year-on-year for the second consecutive month in September, as a result of high interest rates, rising fuel costs and slowing economic growth.
A total of 157,536 cars were sold in the country last month, translating into a drop of 5.4% compared with sales recorded in September 2011, Reuters said, citing data compiled by the Society of Indian Automobile Manufacturers (SIAM).
“The primary issue has more to do with what is happening in India; the slowdown in India in terms of the economy slowing down, as well as high interest rates and lower consumer sentiment,” Rakesh Batra, National Leader India Automotive Sector, Ernst & Young, told Automotive World.
Production cuts and temporary shutdowns have taken their toll on the Indian automotive industry this year. S Sandilya, President of SIAM, believes that factors such as a subdued rise in income and rising cost of ownership will further depress sales, Reuters said. This trend is expected to continue for some time.
SIAM has slashed its previous estimates for new car sales growth in the current financial year down to just 1-3%, from the earlier figure of 9-11%. The society had already pared its initial estimate of 10-12%.
“1-3% is not really any growth, as far as I’m concerned. I think we should be prepared for a flat year,” Batra told Automotive World.
Sandilya feels that the country’s automotive industry could miss its 2016 turnover target of US$160bn, by around US$30bn, should the current trends prevail.
