MUMBAI, India (AP) — Car sales in India may grow just 1 percent this fiscal year, down from a July forecast of around 10 percent as the economy falters, the Society of Indian Automobile Manufacturers said Wednesday.
Rising fuel prices, economic growth at "not encouraging" levels, inflation and still-high interest rates are hurting domestic demand more than expected, the industry group said.
Exports have also been hit, with a 6 percent fall in total vehicle exports from April through September.
Car sales for September slid 5.4 percent from a year earlier to 157,536 vehicles while commercial vehicle sales were flat at 70,683 vehicles. Sales of two-wheelers slid 13 percent to a little more than 1 million as economic weakness spread to the rural economy.
India's rural economy has been a bulwark of strong consumption amid global uncertainty. But the auto industry group said moderating agricultural growth is hurting commercial vehicle sales and weak rural demand has hit sales of motorcycles, which are favored by millions of Indians in villages who can't afford cars.
The group said the government's focus on rural development was undermined by the fact that much of the money is not reaching the intended beneficiaries.