Auto sector growth could slow down to 14-15% in 2011

Mumbai, Feb 13 (PTI) Rising interest rates coupledwith increasing fuel prices and input costs have the potentialto affect the Indian auto sector''s growth which could slowdown at around 14-15 per cent in 2011 as compared to 31 percent in 2010, a top industry official has said.

The industry had grown at 23-24 per cent in 2009despite the global economic slowdown.

"High input costs and rising fuel prices coupled witha steady hike in interest rates would affect sales this yearfor the overall industry. However, we (GM) don''t expect anycontraction," General Motors India Vice-President, CorporateAffairs, A Balendran, told PTI here.

GM India''s sales grew a mere 6 per cent in Januarythis year to 9,984 units from 9,421 units in the same month ofthe previous year. It expects a similar sale in Februaryas well, Balendran said.

"Market sentiment is very low at this point. Thereare issues like the economic slowdown, (tight) liquidity andinflation. These are not very good signs for the autoindustry. It would make the products costlier."

Crude oil prices have touched USD 100 per barrel thusmaking petrol dearer for consumers, Balendran said, addingprices are expected to rise further.

The country''s largest car-maker, Maruti Suzuki, hadrecently said it fears a drop in demand for the auto sector inFY 12 driven by factors like high inflation, rate hikes andhigh fuel prices. .

"Things like high inflation, the rate hikes and the fuel price increase point out to a tightening in the situation...we need to be wary and careful as the buoyancy we saw tillnow will definitely slow down a bit," Maruti Suzuki ChiefGeneral Manager, Marketing, Shashank Srivastava, had told PTIearly this month.

Srivastava, however, did not give any estimate ofindustry growth.