Thursday, September 08, 2011
By Pranjal Gera
Slow down in car sales likely to be greater than predicted level: SIAM
Amidst the predictions of slowing down sales in the Indian automobile industry, the Society of Indian Automobile Manufacturers (SIAM) has said that the slowdown in car sales is expected to be of a higher degree as compared to the previously predicted level. According to the industry body, the increased vehicle cost and rising interest rates have force the consumer to reduce his spending.
In the month of August 2011, the industry witnessed a fall of 5.7 percent in the sales of passenger vehicles including cars, sports utility vehicles (SUVs) and vans, SIAM said in a statement. It is to be mentioned here that car sales in India, which is the world’s second fastest growing car market after China, surged massively at 30 percent in the last financial year.
However, in the current financial year, the growth figures in car sales are expected to dip down to 10 to 12 percent in the current financial year. Some industry analysts believe that the slowdown can be worse than expected before, making the industry to register a lower single digit growth.
According to a statement given by Mr. Pawan Goenka, President of the SIAM, the industry body many need to revise the growth projections for commercial and passenger vehicle segments in the coming months.
Since March 2010, the Reserve Bank of India has raised the borrowing rates as many as 11 times, in a bid to curb the high inflation in the Indian market. The move, however, has been affecting the credit based purchases badly. Meanwhile, the increased fuel prices have further contributed in slowing the demand in the passenger car industry, keeping buyers away from the showrooms.
However, the ongoing slow demand momentum is not limited to the Indian market as neighbouring China has also decreased its projected growth rates for next four year at roughly 10 percent. The Chinese car market had registered a massive growth of 33 percent in the last financial year, becoming the fastest growing auto market in the world.