Car Sales Grow Only 3% in India

Automakers sold 163,200 passenger vehicles in India last month compared with 158,800 units in May 2011, according to the Society of Indian Automobile Manufacturers.

SIAM blames May's tepid sales gain the smallest year-over-year increase in seven months on higher interest rates and gasoline costs, waning consumer confidence and rising vehicle prices.

This spring the Indian government hiked the excise taxes on gasoline-powered cars and tariffs on luxury models that carmakers must pay. The companies responded by raising prices of gasoline-powered passenger vehicles by 4,000 rupees-70,000 rupees ($70-$1,250).

Last month market leader Maruti Suzuki posted a 6% volume decline to 72,300 vehicles. Sales rose 3% to 31,900 units at Hyundai and 7% to 17,400 units at Tata.

Sales of buses and commercial vehicles climbed 9% to 62,000 units in May because sales of light-duty trucks and vans jumped 24% to 39,800 units. Demand for medium- and heavy-duty vehicles fell 11% to 22,200 units.

SIAM says car sales may decline in coming months. The group predicted previously that India's passenger vehicle sales would advance 12% to 2.3 million units in the current fiscal year, which ends March 31, 2013. Now it plans to review that forecast.