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In June 2011, passenger cars and utility vehicles recorded substantially lower growth, 1.

62 percent
and 4.36 percent, respectively.
Interest rates, higher fuel prices and an increase in vehicle prices are the reasons for the lower
growth, according to the auto industry organization.
The Indian passenger-vehicle market slid 15.7% year-on-year (y/y) in July from a year ago, its biggest
drop in nearly three years, as rising interest rates on loans and higher fuel costs crimped demand for
new vehicles and kept buyers out of showrooms
Macroeconomic factors such as increasing diesel and gasoline (petrol) prices and a recent interest-
rate rise by the Reserve Bank of India (RBI) have resulted in weak consumer sentiment during the
past few months. The RBI recently increased its policy rate by 50 basis points in a bid to rein in high
inflation, making corporate and individual loans more expensive. Carmakers operating in India
believe that the impact of this on demand will be too strong for counter-measures such as discounts
and incentives to have an effect (see India: 27 July 2011: Reserve Bank of India Raises Policy Rate
by 50 Basis Points, Automotive Companies Expect Severe Decline in Demand).