India's domestic car sales fell by 6.6% in October, the fastest drop in more than three years, as consumer loans dried up amid a global credit crunch, the Society of Indian Automobile Manufacturers (SIAM) said on Nov. 10.
Car sales slipped to 98,900 units in October from 105,877 units in the same month a year earlier.
"Whatever steps that were taken up by the government and the RBI (Reserve Bank of India) to ease the liquidity crunch are not sufficient," said SIAM director general Dilip Chenoy. The measures "have not trickled down to the auto industry," he said. "The outlook is not good. Financing is still a big issue for the auto industry," he said,
Until recently, India's market had been racing ahead, posting double-digit growth, spurred by a fast-growing economy that had created a new, affluent group of car buyers. But high borrowing costs and new tough loan conditions as a result of the global credit crunch have hit vehicle sales.
Cumulative vehicle sales growth for the seven months to October stood at 5.6%. Earlier this year, SIAM had forecast overall vehicle sales growth of 12% to 15% for the financial year to March 2009.
The fall in passenger car sales was the biggest monthly drop since an 11% tumble in July 2005. Motorcycle sales, meanwhile, slid by 18.2% to 538,353 units while total two-wheeler sales fell by 14.5% to 678,245 units. Commercial vehicle sales slumped by 35.9% to 28,027 units, SIAM said.
In October, sales of car market leader Maruti Suzuki India fell by 6.4% to 52,153 units. Maruti, which is majority owned by Japan's Suzuki Motor Corp, holds around 45% of India's passenger vehicle market.
India's automotive industry, which produces 1.5 million vehicles annually, is worth $34 billion a year and contributes 5% of the country's gross domestic product. In recent years, global automakers have been steering towards India to grab a share of one of the world's least penetrated car markets, at just seven per 1,000 people compared to 550 per 1,000 in such countries as Germany.
Copyright Agence France-Presse, 2008