Domestic passenger car sales posted the slowest growth in 24 months in May this year at 7 per cent as rising fuel prices and interest rates discouraged customers from new purchases.

According to figures released by the Society of Indian Automobile Manufacturers (SIAM) today, domestic car sales stood at 1,58,817 units in May 2011 against 1,48,425 units in the same month last year.

“This is the slowest growth rate since May 2009, when the increase was just 2.77 per cent,” the SIAM Senior Director, Mr Sugato Sen, told reporters here.

The last time that the car sales grew by just single digit was in June 2009 at 8.23 per cent, and since then, the industry has been witnessing healthy double-digit growth, he added.

“In retail sales, there are some bottlenecks like higher interest rates, non-availability of finance, rising fuel prices and higher prices of vehicles. The sentiment in the market is not very positive and next month, we expect this to reflect in the sales numbers,” Mr Sen said.

Under these circumstances, he said it is unlikely that the passenger car sales forecast for the fiscal would be achieved.

“... But we have not reviewed it yet. The review will be done next month when we will complete the first quarter of this fiscal,” he said.

SIAM had projected a growth of 16-18 per cent in passenger car sales for the 2011-12 fiscal, while the overall industry was expected to grow by 12.15 per cent.

“One of the biggest worries is that RBI has changed the specification of the NBFCs. Now NBFCs cannot provide loans for purchasing non-transport vehicles, which are personal vehicles. They won’t get the re-finance from banks. This will hurt the industry severely,” he said.

During the month, Maruti Suzuki India posted just a 0.99 per cent increase in domestic car sales to 76,874 units, while that of Hyundai Motor India Ltd was 14.18 per cent at 31,001. Tata Motors saw a decline of 12.56 per cent in sales to 16,280 units.

According to SIAM, total two-wheeler sales, however, increased by 14.49 per cent last month to 10,72,287 units from 9,36,555 units in May 2010.

Motorcycle sales grew by 14.33 per cent to 8,29,255 units from 7,25,311 units.

Hero Honda posted a 13.54 per cent increase in sales to 4,55,662 units. Bajaj Auto also posted a 13.87 per cent increase to 2,18,321 units during the month, while Honda Motorcycle and Scooter India (HMSI) saw its bike sales grow by 10.2 per cent to 60,733 units.

Chennai-based TVS Motor Co saw its motorcycle sales increase by 5.42 per cent to 55,154 units during the month.

The scooters segment witnessed a growth of 11.21 per cent in sales to 1,75,160 units from 1,57,509 units.

HMSI’s scooter sales during the month were down 2.56 per cent to 75,012 units, while that of TVS Motor Co grew by 17.13 per cent at 35,803 units. Hero Honda’s scooter sales grew by 24.10 per cent to 29,460 units.

Three-wheeler sales during May grew by 8.6 per cent to 35,991 units against 33,140 in the same month last year. Sales of commercial vehicles jumped by 16.16 per cent to 56,314 units from 48,479 units.

“In the CV segment, LCVs are having good growth. But M&HCVs have slowed down and this is a worry area, as it shows slowing down of the economy,” Mr Sen said.

Light commercial vehicles sales grew by 22.9 per cent to 31,451 units from 25,590 units. Medium and heavy commercial vehicle sales stood at 24,863 units (22,889 units).

Total sales of vehicles across categories registered a growth of 13.40 per cent to 13,70,786 units in May this year against 12,08,820 units in the same month last year, SIAM added.

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