Surging interest rates, fuel price may dent car sales in July

The Indian Auto mobile sector is continuously witnessing a slowdown from 2010 and it is expected that the sluggish growth will continue in 2012 as well. This decline in the growth curve of the Indian car market is because of the continuous rise in the interest rates and rising fuel prices. As speculated it is said that the passenger vehicle segment might see a slowdown in the sales in July as well.

Recent reports stated that the country's largest car maker Maruti India is expecting a decrease in the car sales in July sales figure by 20,000 units due to the cessation of the production of hatchback Maruti Swift and sedan Maruti Swift Dzire. The production of these two cars is expected to resume next month. The report also revealed that the discontinuation of only these two cars will bring down the car sales in India to about 10%. Maruti India accounts for 45% share in the Indian market where about 189,000 cars were sold last year.

Commenting on the situation Mayank Pareek, Managing Executive Officer(marketing and sales) MSIL, said that there are 3 main reasons behind this slowdown, the increasing interest rates which have gone up 11 times in the last one year time period. The petrol hikes and the high level of inflation in the market. He also added that the main slowdown in the passenger vehicle segment will be witnessed in the month of July.

According to the data revealed by the reports it could be said that the market growth is going to come down to 6% which was 8.77% in the time period between April and June. According to SIAM this segment is going to witness a growth of only 10-12%, which was expected to be 16-18% in the month of April. The strike at the Manesar facility of Maruti India also affected the sales figure of the country and contributed majorly towards the dent in the growth of the Indian car market.

The only option now the companies have to retain their sales in the market is by launching the diesel variants of their popular cars, as the diesel prices are much lower than the petrol prices as well the diesel price do not fluctuate much.