New car sales in India have fallen for the second month in a row. August car sales were 4.4% off last year’s pace according to data released by India’s auto industry trade association, the Society of Indian Automobile Manufacturers (SIAM).
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The softening of sales in India reflects the impact of higher interest rates and higher prices, according to industry observers. Higher price Inflation has caused the government to raise interest rates while car prices have jumped on higher raw material costs.
Car sales fell to 94,584 units in August and the 4.4% year-in-year decline follows a drop of 1.7% in July, which was the first decline in three years.
A jump in inflation to double digits since June forced the central bank to raise its key lending rate to a seven-year high of 9 percent. This has bumped up rates on automobile loans, damping consumer demand.
There are also signs that India’s fast pace economic growth is slowing, with the latest official figures pointing to annual GDP growth slipping under 8%.
