India May car sales slide by 12% due to weak economy

AFP: Car sales in India slid by over 12 percent in May from a year earlier, data showed Tuesday, the seventh straight month of decline in the once booming market as a slowing economy dragged down demand.

“Economic weakness is weighing on demand,” said Sugato Sen, senior director of the Society of Indian Automobile Manufacturers (SIAM).

Domestic passenger car sales, seen as a pointer to overall economic health, fell 12.26 percent to 143,216 in May from May 2012.

SIAM blamed high borrowing costs and worries over a sharp slowdown in the economy.

The weak demand has forced automakers to introduce “buy now, pay later” schemes, interest-free repayments and double-digit discounts.

Sales of commercial vehicles such as trucks and buses dropped by 10.6 percent to 55,458 from the year-earlier period.

A fall in India’s currency to record lows against the dollar has cast doubt over hopes that the central bank will cut interest rates further to kickstart sharply slower economic growth.

Domestic passenger car sales fell by 6.7 percent in the last financial year to March 2013 to 1.89 million from a year earlier -- the first contraction for 10 years.

Car sales are projected to grow by three to five percent in the 12 months to March 2014, according to SIAM, but this is far below a record 30 percent rise notched up in 2010-11.