Car sales in India grew at the slowest pace in seven months during May with industry body SIAM reporting 2.78 percent growth as high interest rates and petrol prices continue to hit the market.
According to figures released by the Society of Indian Automobile Manufacturers (SIAM), domestic car sales in May stood at 1,63,229 units as against 1,58,809 units in the same month last year.
"This is the slowest growth since October last year when car sales witnessed a decline of 23.77 percent," SIAM Director General Vishnu Mathur told reporters.
"The softening of interest rates, which was expected to happen has not materialised and continues to be high. Moreover, the high prices of petrol have also affected sales and the overall sentiment in the market is very negative," he added.
Increase in prices of vehicles following the excise duty hike in the Budget has also had a major impact, Mathur said, adding that even diesel vehicles which used to have a lot of demand had tapered off.
"In the premium and executive segment, which are generally considered to be not price sensitive, the demand for diesel vehicles has slowed down," Mathur said.
At such a time, he added, "if the government goes ahead and decides to tax diesel vehicles more, the overall demand will suffer all the more".
In the passenger car segment, market leader Maruti Suzuki's sales dipped by 5.94 percent to 72,309 units.
However, rival Hyundai Motor India's sales increased by 3.03 percent to 31,939 units. Homegrown auto major Tata Motors' car sales were up by 6.70 percent at 17,371 units.
In May, total sales of vehicles across categories registered an increase of 10.52 percent to 15,13,032 units as against 13,69,070 units in the same month last year.
HMSI's scooter sales grew by 65.47 percent to 1,24,123 units in May, while Hero MotoCorp sold 36,312 units, up 24 percent. TVS Motor's sales saw decline of 2.42 during the month to 34,936 units.
Commercial vehicles sales grew by 9.12 percent to 62,025 units during the month, from 56,841 units in the year-ago period, SIAM said.
Medium and Heavy Commercial Vehicle sales declined 10.58 percent to 22,227 units during the month compared to 24,858 units in May last year.