India's car sales fell nearly 5% in the first half of the financial year, the steepest drop in a decade, as buyers steered clear of showrooms due to a weak economy, data showed on Tuesday.
The sales performance released by the Society of Indian Automobile Manufacturers (SIAM) appeared to
put the once-vibrant sector on track for a second straight year of declining sales.
"We will be lucky if we start coming close to the zero growth level in passenger car sales," SIAM's new president Vikram Kirloskar told a news conference.
The trade body's data showed car sales in September squeezed out growth of 0.7% year-on-year to 156,018 units -- the highest monthly total since the start of the financial year.
But car sales growth for the six months since April plunged by 4.67 % from a year ago, the sharpest decline since the first half of 2002-03 when car sales shrank by 6.96 %, SIAM said.
"Until we see good economic growth, people will be cautious and take fewer risks -- cars are a large commitment of money," Kirloskar said.
"With the economy slowing, people are worried about their jobs," he said.
SIAM initially expected passenger car sales to grow by one to three % this financial year to March 2014 but the body has said it expects negative growth unless there is "a big surprise" in the next few months.
Carmakers hope more buyers may come into showrooms in the next few months as India's religious festivals season swings into high gear.
The season is traditionally seen as an auspicious time to make big-ticket purchases and automakers have ramped up special offers for purchasers.
This year's healthy monsoon is seen boosting rural incomes and could spur more vehicle purchases, SIAM added.
But analysts warn that even the festive season could produce disappointing results with economic growth expected to be as low as 3.7 % by some analysts, down from 5% last year.
Car sales contracted for the first time in a decade in the last financial year in sharp contrast to previous years which saw a breakneck annual growth of 20 to 30 % -- prompting foreign automakers from Ford to Volkswagen to make a beeline for the country as they sought to boost sales globally.
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