SIAM slashes car sales growth projection

India’s car industry body, the Society of Indian Automobile Manufacturers (SIAM), significantly lowered its sales forecast because of higher interest rates, volatile fuel prices and the financial crisis in Europe. Passenger car sales this fiscal year to March are expected to increase only from 2 to 4%. Forecasts during the beginning of the year were from 16 to 18%, which were later on lowered to 10 to 12%. SIAM President and Eicher Group Chairman S. Sandilya said, “If the government continues to raise fuel prices and interest rates continue to go up the demand for cars will remain subdued.” He explained that “Car sales got impacted simply because of high interest rates and high fuel prices but demand for movement of goods still remains because the economy is still growing at 7 to 8%.” Sandilya cited labor unrest as another major reason behind the lowering of the car sales forecast. He said that Maruti Suzuki India (MSI) was severely affected by labor unrest at its Manesar plant: “Maruti produces and sells 50% of the market’s cars. So, any negative incidents happening at Maruti Suzuki will obviously impact the industry.” Domestic car sales declined by 1.36% from 921,812 units to 909,283 units during the April-September period this fiscal year, compared to the same period last year. MSI’s sales in the same period went down by 11.55% from 441,899 units to 390,878 units in the same period last year. Sandilya emphasized though that inspite of these trends, India has become the second fastest growing passenger vehicles market in the world and sales reflected a 9.90% increase from January to August. Germany, with 11.20% topped the list. The U.S. placed third, followed by Brazil and China. (October 10, 2011)