PTI

Chandigarh: Tata Motors said that the industry would grow at modest pace only in the second quarter of this fiscal owing to rising lending rates and fuel costs.

“We think overall automobile industry’s growth will again remain in single digit in the second quarter of this fiscal as it was in the first quarter,” said Nitin Seth, Tata Motors Car Product Group Head.

In the first fiscal of 2008-09, the automobile growth remained 7-8%, a sharp fall from 17% in the corresponding period of last fiscal.

“Indian auto industry declined from 26% in the first quarter of 2006-07 to 17% in the same period in 2007-08 and now it has gone down to 7-8% on account of increasing lending rates and fuel cost,” he said.

“Tata Motors registered 5% growth in the first quarter of this fiscal,” he said.

“There is no doubt that current conditions have impacted the industry’s growth,” he asserted.

Describing the ongoing phase for the auto industry as tough, he said, “People are postponing their purchases as the cost of buying has shot up considerably during last couple of months due to steps taken by the government to rein in the inflation.”

Seth said that the banks have raised their lending rates by at least 3% in the last few months which has compelled buyers to delay their purchases.

“Only those people, who are in urgent need of a car, are buying it. As a result, the growth is affected,” he said.

He further added that Society of Indian Automobile Manufacturers (SIAM) an organization of automobile companies, would hold a meeting on 4 September to urge the government not to further allow any increase in lending rates.

Tata Motors further said that it would start exporting Indica Vista, which was launched on new generation platform. “We expect to commence the export of this version within eight months to one year primarily to South Africa, Italy, Spain and Sri Lanka,” he informed.

Tata Motors have sold 11 lakh cars of its earlier platform since their launch and out of which it sold 8.75 lakh of Indica model cars. “Out of 9.85 lakh Indica, we exported 70,000-80,000 cars to other countries,” he said.

The company also plans to launch other new models on new generation platform, on which it has invested Rs1700 crore, within next one or two years.