Car sales growth slumps to two-year low in May

Car sales in May grew at a mere 7 per cent, the slowest growth rate in 24 months, according to the monthly data released by the Society of Indian Automobile Manufacturers (SIAM).

The slow growth was attributed to higher fuel prices, higher loan rates, as well as higher vehicle prices due to the increasing cost of raw materials and inputs.

Sales grew to 158,817 cars in May from 148,425 a year earlier – the lowest since a 2.77 per cent growth increase in May 2009, when sales were hit by the global economic slowdown.

"In the 2008 crisis, the main cause that impacted sales was that there was no availability of finance," Sugato Sen, senior director at SIAM, told reporters. "This situation has reappeared in the past two months."

"There are some bottlenecks like higher interest rates, non-availability of finance, rising fuel prices and higher prices of vehicles. The sentiment in the market is not very positive and next month too, we expect this to reflect in the sales numbers," Sen said, indicating that car sales in June are expected to grow at an even slower pace.

Under these circumstances, he said it is unlikely that the passenger car sales forecast for the fiscal would be achieved. "But we have not reviewed it yet. The review will be done next month when we will complete the first quarter of this fiscal," Sen said.