Author: Aaron Chaze

HIGH INTEREST RATES AND RISING FUEL COSTS HIT AUTO SECTOR


By Aaron Chaze


Indian car sales slipped 12.5% year-on-year, to 141,083 units, in December, according to the Society of Indian Automobile Manufacturers (SIAM).

Heavy-vehicle sales (trucks and buses) dropped 13%, to 62,786 units. Motorcycle sales, however, grew by 4.5%, to 1.1 million units. High interest rates and the increasing cost of fuel are affecting the market, and car sales to March (the fiscal year-end) will likely only grow by a maximum of 1.0% year-on-year, says SIAM.

Crisil, India’s leading domestic credit-rating agency, said in its latest report that GDP growth will be 6.7% for financial year 2013–2014, compared to the 5.5% growth expected for 2012–2013. Crisil expects the pickup in GDP growth will be driven largely by private-sector consumption growth and aided by increased government spending and lower interest rates.

Crisil also expects core inflation to come down to 7.0% against the expected 7.7% for the current year, aided by a stronger rupee and lower oil prices. The Reserve Bank of India’s technical advisory committee indicated that there is further room to cut interest rates, as inflation eased to a 10-month low in November, holding just above 7.0%. The RBI last cut rates by 50 basis points in April 2012, to 8.0%.