NEW DELHI: Indian car sales grew at the slowest pace in nearly two years in April, data showed Monday, as price hikes, rising fuel costs and more expensive loans kept buyers out of showrooms.
Domestic passenger car sales in Asia's third-largest economy rose by 13.18 percent to 162,825 units in April from 143,862 units in the same month the previous year, the Society of Indian Automobile Manufacturers (SIAM) said.
The growth was down from the more than 24 percent year-on-year jump posted in March and SIAM said it marked the slowest pace of expansion since June 2009.
"Consumer confidence is low" amid economic uncertainty, SIAM senior director Sugato Sen said.
Domestic car sales grew by 30 percent to 1.98 million units during last year -- the most in more than a decade -- fuelled by an increasingly affluent middle class, new model launches and cheap loans.
But industry experts have warned that surging raw material input costs of such goods as steel and rising domestic borrowing costs would put the brakes on such explosive growth.
"We expect there will be some delay in purchases due to higher interest rates and higher prices," SIAM's Sen said.
However, India remains the second-fastest growing auto market in the world after China and SIAM expects the Indian industry to overtake Brazil to become the sixth-largest auto market in the world during this fiscal year.
SIAM has forecast passenger car growth for the industry will "settle down at around 12 to 15 percent this year."
But other industry experts now suggest year-on-year growth in passenger car sales this year may turn out to be below 10 percent with interest rates rising.
India's commercial banks have hiked their lending rates in wake of aggressive tightening by the country's central bank to clamp down on stubbornly high inflation, pushing car loan interest rates as high as 14 percent.
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