India’s car sales in February fell 26% from a year earlier, the biggest fall in more than 12 years, as weakness in the economy and high cost of fuel and finance continued to dampen demand.
Car manufacturers sold 158,513 units in February compared with 213,362 in the same month a year ago, the Society of Indian Automobile Manufacturers (SIAM) said. It was the fourth consecutive monthly slide and the worst performance since December 2000, when sales had plunged 40%.
SIAM said car sales could decline by a larger margin for the full fiscal year as all industry segments are showing signs of deceleration.
Demand for vehicles in India, a barometer of the country’s economic health, is led by a middle class that mostly bases its decision to buy on the price of fuel and loans. While interest rates continue to be high, automotive fuel prices have risen almost 30% in the last 12 months. Weakness in the economy and high inflation have further hit sales.
With the February drop, SIAM’s warning last month that the domestic industry could be headed for its first fall in annual sales in a decade seems certain now. In 11 months, SIAM has revised its car sales growth forecast for the current fiscal to 0-1% from 10%-12% in April 2012.
The domestic automotive industry, which has been demanding measures to shore up sagging sales, faced disappointment last month when the Union budget raised taxes on sports utility vehicles, imported cars and motorcycles, and did not offer any sops.
To cope with the slump in demand, carmakers Maruti Suzuki, Tata Motors and General Motors have implemented production cuts.
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