Dragged down by slow economic growth and a demand slump, passenger car sales in the country fell by 6.7 per cent in the year ended March 2013, the first such decline in a decade.

The industry, however, is hopeful of a better 2013-14, with the Society of Indian Automobile Manufacturers (Siam), forecasting a modest growth of 3-5 per cent on expectations of an improvement in overall macro-economic conditions.

According to the data released by the industry body, passenger car sales in the last fiscal stood at 18,95,471 units, compared to 20,31,306 units in the previous fiscal. This is the first annual decline since 2002-03, when car sales had dropped 2.09 per cent.

“The year has been bad and that’s visible. The factors that impact consumer buying behaviour have not been positive. Overall economic growth was not so encouraging in the last fiscal,” Siam President S Sandilya said.

In March this year, car sales tumbled for the fifth consecutive month, declining 22.51 per cent.

Factors such as high vehicle finance rates, in the range of 10.5 to 15 per cent, high inflation and high fuel prices, especially petrol, impacted car sales, Mr. Sandilya said.

He, however, added that the next fiscal was likely to be better for the industry as policy changes by the government were expected to boost demand.

“There are concerns and uncertainties for the future, but there is also hope. In recent times we have seen some positive policy decisions from the government. Macro-economic recovery is also expected. Petrol prices and interest rates are expected to decline which will reduce cost of ownership and boost demand,” Mr. Sandilya said.

Siam has forecast the entire automobile industry to grow 6-8 per cent in 2013-14, faster than the 2.61 per cent growth it reported in the last fiscal.

The total of vehicle sales in 2012-13 stood at 1,78,15,618 units, up from 1,73,61,769 units in 2011-12.

Siam had projected car sales to grow by 10-12 per cent at the beginning of last fiscal that was later revised downwards thrice during the year. In its last forecast in January this year, car sales growth projection was lowered to just 0-1 per cent for last fiscal.

In 2012-13, market leader Maruti Suzuki's sales went up marginally to 8,61,337 units, while rival Hyundai Motor's saw a fall of 1.12 per cent at 3,82,851 units. Tata Motors' car sales dipped by 32.28 per cent to 1,74,692 units, Siam data said.

The two-wheeler segment witnessed a rise of 2.90 per cent to 1,37,97,748 units in FY'13 from 1,34,09,150 units in FY'12.

In the motorcycle segment, total sales rose marginally to 1,00,85,586 units from 1,00,73,303 units in previous fiscal.

Sales of market leader Hero MotoCorp dipped 4.72 per cent to 53,62,730 units. Bajaj Auto's sales went down by 4.01 per cent to 24,63,863 units, while Honda Motorcycle & Scooter India (HMSI) saw a growth of 53.78 per cent at 11,86,726 units.

In the scooters segment, SIAM said total sales increased by 14.24 per cent to 29,23,401 units in 2012-13 from 25,58,981 units in 2011-12.

HMSI posted a growth of 15.97 per cent at 14,20,115 scooters and Hero MotoCorp saw its sales going up by 32.68 per cent to 5,49,808 units in last fiscal.

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