Car sales in India grew just 7% in May, the slowest rate in two years, fuelling fears that annual growth will fall short of the 12-15% previously predicted.
Sales for the month were 158,817 units, up from 148,425 in May 2010, according to figures from the Society of Indian Automobile Manufacturers who blamed rising vehicle prices, increasing fuel costs and costlier loans for the slowdown.
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In April, year-on-years sales had grown 13% and in March had jumped 24%.But sales of trucks and buses – a key barometer of economic activity – rose 16.16% in May from a year earlier to 56,314 units in May, SIAM said.
“This is the slowest growth rate since May 2009, when the increase was just 2.77%,” SIAM senior director Sugato Sen told reporters.
“The sentiment in the market is not very positive,” he added, expressing concerns that the Indian auto sector may fall short of its predicted 12-15% growth in the current financial year, which ends in March 2012.
SIAM will review data projections next month, Sen said, adding that he expected sales to grow at a slower rate in June.
Last year, car sales grew by 30% to 1.98m units, fuelled by an increasingly affluent middle class, new model launches and cheap loans.
But rising vehicle prices – up by an average of between 1% and 2% from market leaders Maruti Suzuki, Tata and Mahindra & Mahindra, and a series of interest rate hikes by India’s central bank to tame inflation have impacted demand for cars, analysts said.
See also: BRIC markets review – India
