* First decline in annual sales in 10 years expected
* Small-car sales most heavily impacted-association
* Discretionary purchases "more or less stopped"-SIAM
(Adds analyst comment, details)
NEW DELHI, March 11 (Reuters) - Car sales in India slumped
25.7 percent in February, the biggest fall in more than 12 years
and the fourth consecutive monthly slide, an industry body said
on Monday, as sluggish economic growth continues to weigh on
The industry is expected to see it first decline in annual
sales in a decade as high interest rates and rising fuel costs
in Asia's third-largest economy put off buyers in a market that
was once one of the world's most promising.
Automakers sold 158,513 cars in India last month, data from
the Society of Indian Automobile Manufacturers (SIAM) showed.
Car sales are down 4.6 percent for the first 11 months of the
fiscal year ending in March, it said.
"There is no improvement in the market sentiment. People
have more or less stopped discretionary purchases," Sugato Sen,
deputy director general of SIAM told Reuters.
"This has really impacted the bottom of the pyramid, people
who buy the smaller cars," he said, referring to the slowing
economy that is expected to grow 5 percent, a decade low. "That
is getting reflected in the numbers."
SIAM last month cut its car sales growth forecast for the
year that ends on March 31 to 0-1 percent, its third downgrade
this financial year from an initial estimate of 10-12 percent.
Sen, however, said that car sales in March were unlikely to
reverse the falling trend for this fiscal year and annual sales
were expected to end up in the "negative territory" for the
first time since the 2002/03 fiscal year.
The demand for cars is likely to be hit in the near term by
a surprise hike in taxes on sports utility vehicles (SUVs) in
the last month's budget for the coming fiscal year. The demand
for SUVs had provided some cheer for the automakers.
"We fear that there will be a change. There will be an
impact," Sen said.
Over the past few years, billions of dollars of investment
has poured into the industry from the world's biggest car makers
including Ford, General Motors, and Nissan
, hungry for growth outside their core markets.
Sales grew a record 30 percent in the year to March 2011 and
annual sales have grown every year since the financial year that
ended in March 2003, according to data from SIAM.
But a series of interest rate increases by the
inflation-wary Reserve Bank of India, combined with a slowdown
in India's once-breakneck GDP growth, saw sales growth fall to
just 2.2 percent last year.
Sales of motorcycles fell 4.5 percent in February to 800,185
vehicles, SIAM said on Monday. Truck and bus sales, a key
barometer for the health of the domestic economy, were down 11.1
percent at 68,388, the industry body said.
The automobile sector index was down 0.1 percent
at around noon on Monday, while the broader Mumbai market index
was little changed from its previous close.
(Reporting by Devidutta Tripathy and Sumeet Chatterjee; Editing
by Matt Driskill)