India car sales to miss growth forecast for this financial year image

Even though India’s car sales grew for the first time in five months in November, overall sales are likely to miss the forecast of 2 percent to 4 percent growth in the current fiscal year through March.

Car sales increased 7 percent in November to 171,131 units from 159,939 the same month last year, the Society of Indian Automobile Manufacturers revealed on Thursday. SIAM expects car sales to drop in December from a year earlier.

“The growth in November is still not enough to revive the industry. We don’t expect to meet our forecast of 2% to 4% growth in car sales for this financial year and we may revise the forecast in January,” Sugato Sen, SIAM’s senior director, was quoted by the Wall Street Journal. SIAM downgraded its growth forecast for the Indian market three times this year: to 16%-18% in April, 10%-12% in July and 2%-4% in October.

Weaker sales are determined by higher fuel costs, expensive car loans and the slowing Indian economy. Demand in Asia’s third-largest car market remained modest even during the festival months of September and October.

Demand for diesel cars is still strong however, with market share expected to reach 33 percent from 27 percent last year thanks to lower diesel fuel prices.