India’s Annual Car Sales Drop for First Time in 10 Years

Wholesale deliveries of new passenger cars in India slid 7% to 1.89 million units in the fiscal year ended March 31, according to the Society of Indian Automobile Manufacturers.

SIAM says 2012 marked the country's first full-year sales decline since fiscal 2002-2003. The group blames India's high inflation, steep fuel prices, sluggish economic growth and weak consumer confidence.

India's total passenger vehicle demand grew 2% to 2.69 million units for the year. SUVs remained the only bright spot in India's passenger vehicle market, soaring 52% to 553,000 units.

Market leader Maruti Suzuki boosted volume in India 4% to 861,300 units last year. Demand dipped 1% to 382,900 units at Hyundai and plummeted 32% to 174,700 units at Tata. Mahindra & Mahindra's deliveries jumped 27%, thanks to strong SUV volume.

Shrinking demand has forced carmakers to cut local production in the country and discount vehicle prices sharply in recent months.

Commercial-vehicle volume fell 2% to 793,200 units for the year. A 23% drop to 268,300 units in medium- and heavy-duty vehicles offset a 14% increase to 524,900 units for light commercial vehicles.

In March, India's car deliveries plunged 23% to 180,700 units. SUV volume surged 34%. Heavy-duty truck and bus volume slid 6% to 85,000 units.

SIAM which originally forecast sales a gain of as much as 12% in the just-ended fiscal year predicts the country's demand for cars will grow 3%-5% in the current year. The group expects overall passenger vehicle deliveries to rise 5%-7%, based on a slew of new models, modest economic expansion and lower interest rates over the next 12 months.