Lost pace

New Delhi, April 10: Vehicle sales in the country dropped 4.7 per cent in 2007-08 because of high interest rates and a lack of finance. The drop was largely on account of a 7.92 per cent decline in two-wheeler sales, though passenger car sales grew 12.2 per cent.

Sales of motorcycles, in particular, declined 11.9 per cent.

According to the data released by the Society of Indian Automobile Manufacturers (SIAM), total vehicle sales in 2007-08 were down to 9,648,105 units compared with 10,123,988 in the previous financial year.

Domestic passenger car sales rose to 1,203,531 units from 1,076,582 in the previous fiscal. Motorcycles were down 11.9 per cent to 5,768,341 units against 6,547,195 units in 2006-07.

Total two-wheeler sales slipped 7.92 per cent to 7,248,600 units compared with 7,872,334 in the year-ago period. Sales of commercial vehicles during the last financial year increased 4.07 per cent to 486,817 from 467,765 units in 2006-07.

Dilip Chenoy, director-general of SIAM, said the year was a tough one, particularly for the two-wheeler industry.

“A lack of finance, specially in semi-urban and rural areas, coupled with high interest rates have hurt sales,” he said. The trend is likely to continue in this fiscal, he added.

SIAM said rising input costs, especially of steel, had only added to the problem.

“If we consider only steel that manufacturers use and not include components, the industry would need a price increase between Rs 750 for two-wheelers at the lower end and up to Rs 1 lakh for commercial vehicles at the higher end,” he said.

“Yet, in a declining market it is a very difficult proposition to raise product prices,” he added.

In March, however, the scene appeared better with domestic passenger car sales rising 12.2 per cent to 128,074 units from 114,145 units in the same month last year.