Report: India’s new car market expected to shrink for the first time since 2003 image

New car sales in India are expected to fall for the first time in a decade due to a sharp economic slowdown, high loan rates and rising fuel prices, according to a report from the Wall Street Journal.

Sales have fallen in five of the first 10 months of the fiscal year that will end on March 31, including a more than 12 percent drop in January. The Society of Indian Automobile Manufacturers, an industry lobby group which announces monthly auto sales data, says the market is now witnessing demand shrinkage. SIAM, which had already twice cut its prediction for this fiscal year’s car sales, didn’t say how much they expect overall sales to be.

Car sales in India have fallen 1.8 percent during the April 2012 to January 2013 period to about 1.55 million cars. The likely drop in sales for the fiscal year will be the first since the year through March 2003, when sales fell 2.1 percent.

In the past fiscal year through March 2012 India sold 2.02 million cars, accounting for an increase of 2.2 percent from the previous year. It was the slowest sales growth in three years. In January, SIAM predicted car sales would be either flat or grow 1 percent.