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Automobiles Sales Slumped 4.7% during 2007-08
Jun 06, 2008

The Indian automobile industry experienced tough time during 2007-08 as sales went down by 4.7%, with two- and three-wheeler segment hit hard.

According to the figures released by the Society of Indian Automobile Manufacturers, the total vehicles sale in the domestic market slumped by 4.7% during 2007-08 and reached 9,648,105 Units against 10,123,988 Units recorded in the previous fiscal (2006-07), as reported by

SIAM also revealed that the fall in the vehicle sales is largely caused by decline in sales of three-wheelers, motorcycles and goods carriers in the heavy- and medium-commercial vehicle segment. Motorcycle sales plunged to 5,768,341 Units during 2007-08 from 6,547,195 Units in 2006-07. Two-wheeler segment too reported a drop in sales and reached 7,248,600 Units in 2007-08 from 7,872,334 Units in 2006-07.

The main reason for decline in the sales of the Indian automobile industry was high interest rate on vehicle loan. This affected the auto industry performance in 2007-08 because majority of people in the country buy car or bike through vehicle loan. Not only the personal vehicle buyers take vehicle loan, commercial vehicle and passenger car buyers also resort to loans, as a result, the sales of automobiles fell down in the country.

Besides, the Indian automobile industry also suffered from the unavailability of retail finances and its impact is evident from the decline in auto sales during 2007-08. Lack of retail finances in the country is making accessibility of loan extremely difficult. Less growth in India’s Gross Domestic Product (GDP) has slowed down the growth in the country’s economy, which was also viewed as another factor for decline in auto sales in 2007-08. Furthermore, global economic slowdown and rising inflation too forced customers not to spend money on vehicles.

A Research Analyst at
RNCOS said, “If the retail finance system continues to remain week and the interest rates to increase, it is unlikely then that the Indian auto industry see any surge in vehicles sales. In such adverse conditions, two- and three-wheeler segments will get to see tough time in near future. Hence, the auto manufacturers need to come forward with plans to instill enthusiasm among customers for buying vehicles. And it can be possible with flexible installment plans and heavy discounts.”

Related Market Research Reports:
Indian Automobile Sector - A Booming Market
Asian Automotive Industry Outlook (2007-2011)
Asian Automotive Industry (2007)
Indian Auto Industry Market Overview