Car Sales Fall 16% on Higher Rates, Fuel Costs

    Domestic car sales fell 16% in July, the sharpest decline since November 2008, weighed down by high interest rates and fuel prices, and an output cut at the country's top car maker. Auto sales in India, an important gauge of the country's economic health, are led by a middle class that mostly bases its decision to buy a car on the price of fuel and loans. The industry body expects a revival from this month, driven by a flurry of new car launches and resumption of full production at Maruti Suzuki. 

Carmakers sold 1,33,747 units in July, compared with 1,58,767 in the same month last year, data released by Society of Indian Automobile Manufacturers (SIAM) showed on Wednesday. "The overall sentiment in the market is negative due to high interest rates and fuel prices. People want to buy cars, but they may be postponing purchases hoping for a drop in interest rates, as well as to choose from new car models that will hit the market during the festive season," SIAM director-general Vishnu Mathur said. The drop in sales in July was the steepest since November 2008, when it had fallen over 19.34% in the midst of the global financial crisis.  Maruti Suzuki, India's top carmaker by sales, in which Japan's Suzuki has 54.2% stake, had reported a 26% drop in production, its sharpest-ever monthly fall, due to production disruptions and re-scheduling of its new models of 'Swift' hatchback and the DZire sedan. The company produced 17,000 fewer vehicles in July.