Car sales drop down in July for the first time in three years as the oil price spike and measures to control inflation dampened the mood August 11 New Delhi. While two-wheeler sales grew 19.47 percent and domestic passenger car sales fell 1.71 percent in July. Dilip Chenoy director-general of the Society of Indian Automobile Manufacturers (SIAM) said “this is the first time since November 2005 that the passenger vehicle segment registered a decline. The central bank’s measures to contain inflation of the oil price hike and cost of finance has impacted growth in this segment. ”

Total sales of domestic vehicles stood at 778,907 units compared with 681,771 units in the same month last year. According to figures released by SIAM, passenger cars clocked sales of 87,724 units during the month against 89,250 units in the same month a year ago. Dilip Chenoy said the challenges continue to be the availability of finance, especially in semi urban and rural areas. Interest rates on auto loans, were in the range of 10-12 percent in 2007, increased to 12-15 percent the year. And according to auto analyst Murad Ali Baig, “Second-quarter sales are traditionally lower than first quarter since people wait for the festive season.”

Vice-president in sales and marketing of Hyundai Motor India Ltd Arvind Saxena said “Inflation is affecting the affordability of customers and high interest rates are also making it difficult for buyers to get loans. As the trend suggests, it will not be too surprising if we close the fiscal recording single-digit growth.” Maruti Suzuki India sales grew 1.45 percent to 45,757 units in July against 45,101 units in the same month a year ago while rival Hyundai Motors recorded a flat month by selling 15,061 units in July and while the sales of Tata Motors fell 8.87 percent to 12,012 units.

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