Auto Industry Grows by 2 percent in 2008

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Jan 13 – Tighter credit, a weak job market and a slowing economy pulled growth in India’s passenger car sales down to two percent or 1.2 million units in 2008.

Car makers across the board were affected by the downturn as sales dropped seven percent in December itself. Maruti Suzuki India Ltd., the nation’s biggest carmaker, suffered a 10 percent drop in sales in December while Tata Motors Ltd.’s sales fell 47 percent. Honda Motor Co has also decided to delay opening its second factory in Asia’s fourth-largest automotive market.

Sales of two wheelers also dropped by 23 percent in December as a bulk of the scooters and motorbikes are bought on bank loans. Consequently sales of trucks and busses also plunged to a two year low as sales slumped 58 percent in December.

"(The decline in) two wheelers and passenger vehicles is because of finance and sentiment," Society of Indian Automobile Manufacturers senior director, Sugato Sen, told Reuters. "Finance costs have not come down. If that becomes more congenial, people will start buying," he added. The cost for automobile loans is 14-17 percent and for two wheelers its 24-26 percent.