Domestic passenger car sales posted the slowest growth in 24 months in May this year at 7% as rising fuel prices and interest rates discouraged customers from new purchases.
According to figures released by the Society of Indian Automobile Manufacturers (SIAM) on Thursday, car sales in the country stood at 1,58,817 units in May, 2011, as against 1,48,425 units in the same month last year.
"This is the slowest growth rate since May, 2009, when the increase was just 2.77%," SIAM Senior Director Sugato Sen told reporters here.
The last time that car sales grew by just single digit was in June, 2009, at 8.23%, and since then, the industry has been witnessing healthy double-digit growth, he added.
"In retail sales, there are some bottlenecks like higher interest rates, non-availability of finance, rising fuel prices and higher prices of vehicles. The sentiment in the market is not very positive and next month, we expect this to reflect in the sales numbers," Sen said.
Under these circumstances, he said it is unlikely that the passenger car sales forecast for the fiscal would be achieved.
"... But we have not reviewed it yet. The review will be done next month when we will complete the first quarter of this fiscal," Sen said.
SIAM had projected a growth of 16-18% in passenger car sales for the 2011-12 fiscal, while the overall industry was expected to grow by 12.15%.
"One of the biggest worries is that RBI has changed the specification of the NBFCs. Now NBFCs cannot provide loans for purchasing non-transport vehicles, which are personal vehicles. They won't get the re-finance from banks. This will hurt the industry severely," he said.
During the month, Maruti Suzuki India posted just a 0.99% increase in domestic car sales to 76,874 units, while that of rival Hyundai Motor India Ltd was 14.18% at 31,001. Tata Motors saw a decline of 12.56% in sales to 16,280 units during the month.
According to SIAM, total two-wheeler sales, however, increased by 14.49% last month to 10,72,287 units from 9,36,555 units in May, 2010.
Motorcycle sales grew by 14.33% during the month to 8,29,255 units from 7,25,311 units in the corresponding month last year.
Hero Honda continued its impressive performance with a 13.54% increase in sales to 4,55,662 units. Rival Bajaj Auto also posted a 13.87% increase to 2,18,321 units during the month, while Honda Motorcycle and Scooter India (HMSI) saw its bike sales grow by 10.2% to 60,733 units.
Chennai-based TVS Motor Co saw its motorcycle sales increase by 5.42% to 55,154 units during the month.
The scooters segment witnessed a growth of 11.21% in sales during May this year to 1,75,160 units from 1,57,509 units in the same month last year.
HMSI's scooter sales during the month were down 2.56% to 75,012 units, while that of TVS Motor Co grew by 17.13% at 35,803 units. Hero Honda's scooter sales during the month grew by 24.10% to 29,460 units.
Three-wheeler sales during May grew by 8.6% to 35,991 units, as against 33,140 in the same month last year.
Sales of commercial vehicles jumped by 16.16% to 56,314 units from 48,479 units in the year-ago period.
"In the CV segment, LCVs are having good growth. But M&HCVs have slowed down and this is a worry area, as it shows slowing down of the economy," Sen said.
Light commercial vehicles sales grew by 22.9% to 31,451 units from 25,590 units last year. Medium and heavy commercial vehicle sales stood at 24,863 units as against 22,889 units in May last year, up 8.62%.
Total sales of vehicles across categories registered a growth of 13.40% to 13,70,786 units in May, as against 12,08,820 units in the same month last year, it added.