Indian car sales at slowest in over two years

MUMBAI — Car sales in India grew at their slowest pace in more than two years last month, the sector's main industry body said Monday, as high interest rates and rising fuel costs made buyers wary.Sales in June were up 1.26 percent to 143,370 units from 141,086 units a year earlier, the Society of Indian Automobile Manufacturers (SIAM) said.The organisation also lowered its growth forecast for sales to between 10 to 12 percent for the current financial year ending March 2012, down from an earlier 12 to 15 percent."Interest rates have been higher than what we had thought three months earlier," SIAM president Pawan Goenka said in New Delhi, the Press Trust of India news agency reported."We are sitting at a threshold where if interest rates go up further, it will have a devastating impact on the industry."The monthly sales growth was the lowest since March 2009, when auto-makers across the world were hit by the economic slowdown.It was also the fourth successive month in which year-on-year growth in car sales in India has fallen, hitting one of the world's fastest-growing auto sectors, which has attracted interest from major players like Ford, Renault, Volkswagen and Nissan.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 cheaper loans.But rising vehicle prices and a series of interest rate hikes by India's central bank to tame inflation have combined to hit demand for cars, analysts said.The Reserve Bank of India is likely to raise rates again later this month.India's largest passenger car manufacturer by sales, Maruti Suzuki, posted its first drop in sales for more than two-and-a-half years in June, blaming the fall on a strike at one of its factories.It last showed a drop in sales in December 2008, analysts said."Car sales have moderated but we could see a pick-up once the festive season starts (from August), when inflation could start to moderate," said Mahantesh Sabar

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