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Car sales fall 19% in Aug, first in 10 months


Car sales in India fell for the first time in 10 months in August, and motorcycle sales fell for the first time since January 2009, an industry body said, underlining fears of sluggish economic growth in Asia's third-largest economy.

Many automakers have been forced into production cuts and temporary shutdowns over the past three months as vehicle demand stalls in a key market for firms trying to offset declining growth in established markets.



"Now we are entering a desperate zone," said Sugato Sen, senior director of the Society of Indian Automobile Manufacturers (SIAM). "If the negative trends continue in September as well, we will have to revise our targets downwards."

India's car industry, a star performer in the country's economic rise, has struggled since the start of the decade as previously rapid GDP growth slowed, and the RBI raised interest rates to fight inflation.

Automakers sold 118,142 cars in August, down 18.6 percent from a year ago, according to data released on Monday by SIAM.

The group has already cut its fiscal year growth estimate to 9-11 percent from its previous projection of 10-12 percent.

Falling demand for cars was compounded by a factory shutdown at market leader Maruti Suzuki that cost the company $250 million in lost output, and slashed its August sales by 41 percent.

"Even if Maruti had full production, sales would have been down," Sen told reporters in New Delhi.

Sales of motorcycles, which are family vehicles for millions in India, fell 8.5 percent year-on-year to 766,127 vehicles, in an indicator of weak rural demand, which has been hit in recent months by below-average monsoon rains.

Hero MotoCorp , the world's largest manufacturer of two-wheeled vehicles, has reduced production due to the slowdown in demand, its managing director said last week. Hero's sales fell 11.9 percent in August.