It took just two months for domestic car sales to plunge from an all-time monthly high to a two-year low.
Domestic car sales grew by only 7%, slowest in two years last month, at 158,817 units as rising interest rates and fuel costs forced consumers to postpone their car purchases.
Only in March, car sales had touched an all-time high of over 194,000 units growing by a robust 25% during the process.
The first five months are considered to be a traditionally sluggish period for the automotive industry and companies feel worse may be in store in the coming months."This is the slowest growth rate since May, 2009, when the increase was just 2.8%," said Sugato Sen, senior director, Society of Indian Automobile Manufacturers (SIAM). "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."
The last time car sales grew in single digit was in June 2009, at 8.2%. The bearish sentiment was not restricted to cars alone. Two wheelers that constitute the bulk of the domestic industry in terms of volumes grew by 14.5% last month, the slowest since October 2009.
That put the overall industry growth during the month at 13.4%, the most sluggish in a month since September 2009. A total of 1.4 million vehicles were sold last month against 1.2 million in May 2010.