February Car Sales Plunge 25.7% To A 12 Year Low.
Car sales in India slumped 25.7 percent in February, the biggest fall in more than 12 years and the fourth consecutive monthly slide, an industry body said on Monday, as sluggish economic growth continues to weigh on demand.
The industry is expected to see it first decline in annual sales in a decade as high interest rates and rising fuel costs in Asia’s third-largest economy put off buyers in a market that was once one of the world’s most promising.
Automakers sold 158,513 cars in India last month, data from the Society of Indian Automobile Manufacturers (SIAM) showed. Car sales are down 4.6 percent for the first 11 months of the fiscal year ending in March, it said.
“There is no improvement in the market sentiment. People have more or less stopped discretionary purchases,” Sugato Sen, deputy director general of SIAM told Reuters.
“This has really impacted the bottom of the pyramid, people who buy the smaller cars,” he said, referring to the slowing economy that is expected to grow 5 percent, a decade low. “That is getting reflected in the numbers.”
SIAM last month cut its car sales growth forecast for the year that ends on March 31 to 0-1 percent, its third downgrade this financial year from an initial estimate of 10-12 percent.
Sen, however, said that car sales in March were unlikely to reverse the falling trend for this fiscal year and annual sales were expected to end up in the “negative territory” for the first time since the 2002-03 fiscal year.
The demand for cars is likely to be hit in the near term by a surprise hike in taxes on sports utility vehicles (SUVs) in the last month’s budget for the coming fiscal year. The demand for SUVs had provided some cheer for the automakers.
“We fear that there will be a change. There will be an impact,” Sen said.
Over the past few years, billions of dollars of investment has poured into the industry from the world’s biggest car makers including Ford, General Motors, and Nissan, hungry for growth outside their core markets.
Sales grew a record 30 percent in the year to March 2011 and annual sales have grown every year since the financial year that ended in March 2003, according to data from SIAM.
Source : Rediff.com