LMC Automotive says its India’s 2013 light vehicle sales forecast has been revised down to 3.01m units, which is a decline of 8% from a year ago. The new sales outlook is 11% lower than its previous projection of 3.4m units.
LMC says that market sentiment in India has been very weak since the beginning of this year. A sudden decline in consumer and investor confidence, triggered by the government’s decision last autumn to gradually reduce diesel subsidies, has resulted in six consecutive months of year-over-year decline in light vehicle sales.
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It also notes that high inflation, high interest rates, and a weakening rupee are all eroding consumers’ purchasing power. The central bank has cut its benchmark repo rate three times this year to 7.25%, but that has not helped kick-start consumption and investment so far.
“Manufacturers are doing everything to push sales ranging from launching new variants to offering hefty discounts, but India’s vast middle class burdened by macro-economic risks are simply not buying cars at the moment,” said Ammar Master, senior market analyst for India at LMC Automotive.
