30 April 2011;economictimes.indiatimes.com:Chanchal Pal Chauhan:NEW DELHI: The car market is losing pace. Fewer people visit car showrooms now and companies expect sales growth to slip below 10% this fiscal, after two years of high-speed run. Maruti Suzuki, Hyundai Motor, Tata Motors , Honda Siel Cars and Toyota Kirloskar Motors have all confirmed a drop in customer inquiries and a steeper fall in sales over the last two months when cost of ownership has increased on all counts-from sticker price and loan interest rate to tax and fuel prices. "The customer walk-in at our dealerships has dropped," Maruti Suzuki Managing Executive Officer Mayank Pareek says. "There is a significant change in the mood of customers as inquiries for cars are not translating in actual sales." Before that, the market was in a cruise mode. In fact, India beat China as the fastest-growing car market in 2010-11 with a 30% rise in sales when a slew of new cars and rising incomes lured people into showrooms in hordes. And most carmakers-from Mercedes Benz and BMW to Volkswagen and Toyota to Maruti Suzuki and Tata Motors-have been increasing production, portfolio and market reach to keep up with racing demand. But the mood has become less buoyant. "Customer's perception are changing and the rising cost of car is playing spoilsports," Hyundai Motor Director, Marketing & Sales, Arvind Saxena says. Hyundai expects weaker sales growth in the industry during the April-June quarter. A recovery depends on the movement of interest rates on auto loans, Saxena says. Auto loans interest rates have increased to 11-15% after six rounds of hikes in past one year. Bankers say consumer sentiment changes once interest rate touches 15% mark. "The higher monthly installment burden on loans has already impacted the psyche of potential customers of cars," says Ashok Khanna, who heads the vehicle loan business at HDFC Bank . "The much-expected northward movement of interest rates could further dampen the market in coming months," he adds. Another concern is the fear of a sharp increase in fuel prices. Many people expect oil marketers to increase petrol and diesel prices immediately after assembly election process is over next month in West Bengal, Tamil Nadu, Assam, Kerala and Puducherry due to increasing crude prices. "Customers are concerned about rising inflation coupled with the huge impact of surging fuel prices that directly jack up the costs of operating a car," says Price Waterhouse Auto Analyst & Partner Abdul Majeed. Toyota Deputy MD Sandeep Singh says there is a blip in western and southern markets. The company is diverting cars to its new dealerships coming across the country to maintain the inventory at normal levels, he adds.
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