The Society of Indian Automobile Manufacturers (SIAM) is to host a brainstorming session with automakers and revise growth targets for the current fiscal year after next month’s results are out.

SIAM has officially set a growth target of 8-10% during the year but passenger car sales declined by 6.6% in October to under 100,000 units this year, while two wheeler sales slid by 14.5% and commercial vehicles by 35.9% during the month, Yahoo News India noted. Overall domestic sales declined by 14.42%.

“Whatever rate cuts have happened [are] sufficient to cater to commitments made earlier and, for interest rates to actually start coming down, we need more liquidity,”SIAM director-general Dilip Chenoy said.

“The outlook is not good. April-September growth was 10%. October has been so bad, overall growth has come down to 5%,” he told Reuters.

“We’re only the mirror image of what the vehicle manufacturer is,” JS Chopra, president of the Automotive Component Manufacturers’ Association of India (ACMA), said. “If vehicle manufacturers cut back, component manufacturers will also cut back in the same proportion.”

Reduced vehicle production means fewer orders for component makers, who would see their inventory costs rising as they have to store the incoming raw materials, Chopra told the news agency.

There were also reports today of parts makers having to cope with slower payments by automakers

Exports, too, are slowing as carmakers worldwide combat the global slowdown. ACMA figures show exports grew 6% in April-September, against a 25% compounded annual growth in the last five years, Reuters said.

Hyundai Motor India said recently that some export customers had asked it to put orders on hold as the recession began to bite.

Credit rating agency CRISIL has forecast the slowdown in the Indian automobile sector will last till 2009/10, with single digit growth in all segments, Reuters noted.

SIAM told the news agency it would wait for November sales figures before revisiting the forecast for the year to March 2009. It has already trimmed growth projections once this year, to 8-10% from 12-15%.

The report said much of the auto industry’s pain stems from a period of tight monetary policy enforced by the Indian central bank, which by July had hiked its key short term interest rate to a seven year high of 9%, forcing up rates on vehicle loans.

Interest rates have come down since mid-October and raw materials prices affecting automakers have reduced but analysts have told Reuters the benefits would take time to flow down and margins would continue to be hurt.