India's car industry on Tuesday forecast that sales will grow 10% to 12% this fiscal year -- up from just 2% last year -- as expected interest-rate cuts lure buyers back into showrooms.
The forecast by the Society of Indian Automobile Manufacturers came as passenger-car sales raced ahead in March by 19.66% from a year earlier, marking the fifth straight monthly increase.
But sales growth slowed to 2.19% for the full year to March 31, well down from a scorching 29% rise the previous financial year.
The low growth, the slowest in three years, reflected a weak first few months as climbing fuel prices and high interest rates that pushed up loan costs deterred buyers.
Sales for 2011-2012 totaled 2.02 million cars in the emerging market, which has a population of 1.2 billion people.
Vishnu Mathur, director general of the Society of Indian Automobile Manufacturers, said the car market should revive this year with the central bank expected to start rolling back its aggressive string of rate hikes as inflation eases.
"The number of car owners is still pathetically low in India -- there is huge scope for the auto industry," Mathur told reporters in New Delhi.
Just 12 out of every 1,000 Indians own a vehicle, compared with more than 500 out of every 1,000 people in the United States, Mathur said.
"That's why all the auto manufacturing companies from across the globe are coming to India -- they are all coming here because they see good long-term growth."
Global automakers from General Motors Co. (IW 500: 5) to Toyota Motor Corp. (IW 1000: 5) have been steering to India and neighboring China seeking to boost sales with markets in most developed countries saturated.
Car ownership remains low in India, where hundreds of millions live below the poverty line, but an expanding economy is minting millions of new middle-class families and millionaires each year.
The government expects Asia's third-largest economy to grow 7.6% in the current fiscal year, up from an estimated 6.9% last year.
Copyright Agence France-Presse, 2012