India’s new car sales grew at their slowest pace in nearly two years in April, according to industry data, as price increases and costlier loans kept buyers away.
Domestic car sales rose by 13% year on year in April to 162,825 units, said the Society of Indian Automobile Manufacturers (SIAM).
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The growth was down sharply from a 24% jump the previous month and SIAM said it was the slowest pace of expansion since June 2009.
India’s finance ministry has warned that economic growth may decelerate to around 8% from 8.6% last year due to interest rate increases introduced to curb inflation.
The central bank has raised rates nine times in 15 months saying that short-term economic growth may have to be sacrificed in the fight against inflation, currently running at 9%.
The central bank’s moves have prompted commercial banks to hike car loan interest rates to as much as 14%. Some 70% of Indian car purchases are financed through loans, making car sales sensitive to rates rises.
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By GlobalDataDomestic car sales grew by 30% to 1.98m units during the last fiscal year ended 31 March 2011, the most in more than a decade, as increasingly affluent middle class buyers took advantage of cheap loans.
However, on top of rising interest rates, increases in the cost of raw materials such as steel and rubber have pushed up car prices as well.
Sales of commercial vehicles rose by just 8.2% to 53,202 units last month, the smallest percentage rise since September 2009, SIAM said.
