Hit by the fuel prices and rising interest rates, the July car sales had seen slow growth and now it has been reported that according to industry data, the car sales which slid almost 16 percent in July from a year ago is their biggest drop in nearly three years.
According to media reports, the car sales plunged to 133,747 units from 158,767 in the same month last year, data from the Society of Indian Automobile Manufacturers (SIAM) mentioned. Rising sticker prices on the back of steeper commodity prices, higher fuel costs and 11 central bank interest rate hikes since March 2010 to tame near double-digit inflation have combined to hit demand. The report quoted SIAM director general Vishnu Mathur as saying "People want cars, they want mobility, but they may be postponing their purchases hoping interest rates will go down."
The report stated that the Indian drop was the sharpest since November 2008 when sales fell over 19 percent as countries worldwide were buffeted by the global financial crisis. The sales downturn in India and China comes as global manufacturers such as Ford, Renault-Nissan and GM have been turning to the emerging economic giants to help offset saturated markets in the West.
It was also mentioned that Mathur said Indian car sales could accelerate with a flurry of upcoming model launches beginning this month and the religious festival season starting in September -- seen as an auspicious time for Indians to make new purchases. He mentioned that the car sector's outlook was positive longer term thanks to India's highly under-penetrated market. Just one in 10 households in cities and one in 50 in rural areas own cars.
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