India's April car sales up 13pct

Car sales in India rose at its slowest pace in nearly two years, rising 13.2 per cent from a year earlier in April, as higher interest rates, fuel prices and vehicle costs crimped demand in the world's second-fastest growing auto market.

Indian automakers sold 162,825 cars in April, compared with 143,862 vehicles a year earlier, data from the Society of Indian Automobile Manufacturers (SIAM) released on Monday showed.

"We are anticipating that there will be some postponement of purchases because of interest rates, high prices," SIAM's senior director Sugato Sen said.

Sales of trucks and buses, a key pointer to economic activity, rose 8.2 per cent from a year earlier to 53,202 units in April, the slowest rise since September 2009, SIAM said.

Last week, the central bank raised interest rates by a bigger-than-expected 50 basis points and declared it would battle stubbornly high inflation even at the cost of some economic slowdown.

The rising costs of steel, rubber and other raw materials have forced some Indian car makers, including Maruti Suzuki , to raise prices in recent months. Earlier this month, top car maker Maruti posted a 4.4 per cent rise in global sales to 97,155 units in April, its slowest pace of growth in more than a year.

The company, 54.2 per cent owned by Japan's Suzuki Motor Corp , had warned that the short-term outlook was uncertain due to rising interest rates that could dampen consumer demand, and higher commodity prices.

SIAM expects local auto sales growth to slacken to 12-15 per cent this fiscal year, after it grew a record 30 per cent in 2010/2011 to 1.98 million units driven by demand from a growing middle class in Asia's third-largest economy, easier access to loans and a wider choice of models.

"Overall consumer sentiment, we are not sure how long that will remain buoyant," SIAM's Sen said. "All economic parameters are a bit wobbly."

Shares of Maruti Suzuki fell 1.7 per cent, while those of Tata Motors fell 2.33 per cent after the data release.