CMIE downgrades car sales growth to 7 per cent in 2005

New Delhi: The Centre for Monitoring Indian Economy on Monday downgraded overall car sales growth projection from the earlier 14 per cent to 7 per cent.

"There has been an across-the-board slowdown in car sales during the first four months of 2005-06. We expect a marginal pick up in demand in the second half, but it may not be as high as we had anticipated earlier. We now believe that car sales will grow by about 7 per cent during the year," CMIE said in its latest report.

The report pointed out that cumulative growth up to July was 4.9 per cent compared to 21 per cent last year.

CMIE said the compact and mid-sized cars, which account for about 80 per cent of total cars sold domestically, witnessed substantial slowdown during the current fiscal.

While the compact cars grew by 12.2 per cent in April-July 2005 as against 38 per cent in the corresponding period last year, mid-size cars sales slowed down to 13.9 per cent compared to 30.6 per cent growth during April-July 2004, it said.

The report said even demand for the price inelastic executive and premium categories was also impacted with the the respective categories registering negative growth of 24.10 per cent and 5.95 per cent in April-July 2005 as compared to the same period last year.

While sounding not so bullish on the prospects of the auto sector in the short-term, CMIE said the long-term prospects were very bright.

"Although the short-term prospects of the car market may not seem very bright, the long term prospects are positive. India is becoming an increasingly important market for foreign auto companies," it said.