FACED WITH A battery of dampeners like high interest rates, fuel price hikes and an economic slowdown, passenger car sales are headed towards their first annual decline since 2002-03. Despite growing by 7.2 percent in January 2012, overall sales for the first 10 months of the fiscal year (April 2011-January 2012) fell by 1.2 percent. The worst hit has been the small car segment which is most affected by interest rate hikes.

These figures indicate that passenger car sales will have to notch a handsome growth of 10-12 percent in February and March to end 2011-12 on a positive note. Given this situation, the Society of Indian Automobile Manufacturers (SIAM) has forecast a growth of only zero to two percent in the fiscal year. This will be the first annual decline since 2002-03. The past eight years have seen car sales lead growth in the manufacturing sector, notching growth rates between single-digit to over 20 percent.