Annual car sales to fall for first time in ten years

Annual car sales to fall for first time in ten years An auto industry body has warned that the annual car sales might record a drop for the first time in ten years in the fiscal year till March 2012 as the figure had last recorded a decrease in 2002.

Vishnu Mathur, director general of the Society of Indian Automobile Manufacturers (SIAM) said that the auto industry in the country is very much affected by the level of interest rates and the central bank is unlikely to bring them down soon.

The total car sales in the country had recorded its first monthly fall in three years in July of 2011 due to high cost of financing and increasing fuel costs in the country. The sale figure for the January has been below expectations. Car sales increased 7.2 percent in January compared to the January of 2011, but the rise was not enough to compensate for the fall in sales in 2011.

The sales started growing in November and December, sending some positive igns in the sector that was seeing falling sales in the country.

"Unless sales grow in February-March at 10 to 12 percent, which is unlikely, the industry will miss the sales projection,” said Mr. Mathur.

The Indian auto sector will remember 2011 as the year of prolonged strikes and falling sales and is thus looking at 2012 with optimism and hopes for better times. Car sales in the country have fallen mainly due to high interest rates on financing and increasing prices of fuel. The country’s largest automaker, Maruti Suzuki experienced a steel fall in production while General Motors and MRF found themselves in other issues.

According to the analysts, the increased fuel costs, expensive loans and long inflationary pressures will continue to put pressure on the sector and demand for new vehicles.