New Delhi: Higher input costs and interest rates are seen crimping demand for cars in India, the second-fastest growing auto market in the world after China, with sales growth expected to more than halve in this fiscal year to 12-15% from the peaks scaled a year earlier.
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Auto sales in India grew a record 30% in 2010/11 to 1.98 million units, driven by a burgeoning middle class in Asia’s third-largest economy, easier access to loans and a wider choice of models.
“Commodity prices will be higher; they are at an all-time high now. That in fact is a bigger concern than interest rates,” Pawan Goenka, president of industry body Society of Indian Automobile Manufacturers (SIAM) said on Friday.
The rising cost of steel, rubber and other inputs has forced some Indian car makers to raise prices in recent months.
Goenka, also Mahindra & Mahindra’s automotive president, said the top utility vehicles maker has raised prices on most of its models by 1.5 to 2% with effect from last week.
On Tuesday, India’s largest car maker Maruti Suzuki said it had raised prices by up to 2.4% across all models, its second price increase in three months.
Car sales in India rose 24.4% in March to 194,199 units, the SIAM data showed.
Goenka said passenger car sales for the next year are expected to grow at 16 to 18%.
Sales of trucks and buses, a key pointer to economic activity, rose 15.4% to 77,688 units in March, SIAM said.
Last week, Maruti Suzuki and Mahindra & Mahindra reported their highest-ever sales in a month, with Maruti reporting 28.2% sales growth and Mahindra 18%.
Sales at Tata Motors rose 11%.
Shares of Maruti Suzuki fell 1.16%, while those of Tata Motors fell 1.8% after the data was released.
Graphic by Sandeep Bhatnagar/Mint