New car sales in India grew by just 2.2 percent in 2011-12 , the slowest pace in three years in the last financial year as higher interest rates, increase in fuel prices and a slowing economy crimped demand for automobiles.
When the global financial crisis hit in 2008-09, car sales in India grew by just 1.4 per cent. Since then it jumped to 25 per cent in 2009-10 and 29 per cent in 2010-11.
Sales rose an annual 19.7% in March, a fifth straight monthly increase, but still lower than the 30% growth seen in the 2010/11 fiscal year, before India’s GDP growth started to temper. The Reserve Bank of India has raised its lending rates 13 times since March 2010, while fuel retailers have increased product prices several times.
Vishnu Mathur, director general of SIAM, 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.
For the overall auto industry, the Society of Indian Automobile Manufacturers (Siam) has projected a growth on 10-12 % for 2012-13 as against 12.2% achieved in 2011-12.