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Indian car sales post biggest fall in eight years

Domestic passenger-car sales tumbled 19.38 percent in November -- to 83,059 units -- compared to the same month in 2007.

It was the biggest year-on-year fall since November 2000, when car sales plunged by nearly 22 percent, said Dilip Chenoy, director-general of the Society of Indian Automobile Manufacturers (SIAM), which released the data.

Trucks and other commercial vehicles sales, hit by a slowdown in construction and other economic activity, also slumped, by 49.52 percent to 20,637 units.

That was the biggest fall in nearly 11 years, according to SIAM's records.

Total vehicle sales in India slumped by 17.98 percent in November.

Chenoy said he could not recall a month when overall sales were so bad, calling it the ‘worst-ever total performance. All segments have not fallen together so drastically before.’

‘This is a strong indicator the economy is slowing, it's a big warning signal,’ said auto analyst Vaishali Jajoo at Mumbai's Angel Broking.

But worse could be yet to come.

‘December is traditionally a weak month because buyers are waiting for the launch of the new vehicles in the new year,’ noted an industry official.

Until January, India's vehicle market was posting double-digit expansion as an economy growing by nine percent-plus created new, affluent buyers.

But the economic slowdown, high borrowing costs and stricter loan conditions as a result of the global credit crunch have hit sales.

The figures came as India's carmakers, saddled with inventories of up two months, have been slashing sticker prices following a four percent cut in value-added tax last weekend by the national government.

The tax cut was part of a stimulus package to help the vehicle and other sectors.

Ford India announced price cuts Wednesday of up to 1,100 dollars for top-end models. Japanese-owned Maruti Suzuki, Japan's Honda Motors and South Korea's Hyundai Motors, among others, have also lowered prices.

But despite the price drops and interest rate cuts ‘banks still aren't lending due to problems with non-performing assets. There aren't so many people getting loans,’ said Jajoo.

‘Also, people are becoming more cautious in their spending. There's no magic wand to fix this,’ she said.

Motorcycle sales fell 20.24 percent to 431,171 units while total two-wheeler sales fell 14.68 percent to 567,502 units.

Manufacturers have been temporarily shutting plants to cut output.

Global automakers have been steering towards India to grab a share of one of the world's least penetrated car markets, at just seven vehicles per 1,000 people compared to 550 per 1,000 in Germany.

But Japan's Nissan and France's Renault now have scaled back plans for joint projects in India and others vehicle makers are expected to also curb output.