Page last updated at 10:49 GMT, Monday, 10 November 2008

Brakes put on Indian car making

worker at a Maruti plant
Indian car sales are expected to drop this year

Slowing demand sent car production in India down 12.32% year-on-year in October, industry figures have shown.

And, according to the Society of Indian Automobile Manufacturers (SIAM), domestic passenger sales also fell 9.1% over the 12 months.

Some local car makers, including Tata Motors, have announced temporary plant closures to avoid building inventories.

SIAM says India, one of the fastest growing auto markets, is trying hard to sustain single-digit sales growth.

Between 2002 and 2007, vehicle sales in India grew on average over 14% a year, but that figure is expected to drop this year.

"The whole issue boils down to liquidity. Dealers are not getting enough money to hold stock," said Dilip Chenoy, SIAM's director-general.

Dealers complain that providing automobile loans remain expensive despite several rate cuts by India's central bank.

Domestic motorcycle sales also fell 14% year-on-year.

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