NEW DELHI – The Indian auto parts industry's sales growth is likely to be lower at 12%-15% in the current fiscal year because of an expected slowdown in vehicle sales, the president of the Automotive Component Manufacturers Association of India said Tuesday on? Aug. 30.

"The first quarter of 2011-12 has witnessed some slowdown in vehicle consumption in India and this seems to suggest that the growth in the auto component industry in the current fiscal year will in the range of 12%-15%," Srivats Ram said during a press conference.

The association said the Indian auto components industry's sales grew 34% to $39.90 billion in the fiscal year ended March 31.

"Auto component consumption in 2010-11 grew at a robust pace in tandem with vehicle sales in the domestic market," the industry body said in a statement.

Car sales last fiscal year rose 30%, the biggest gain in over a decade, to 1.98 million units.

The lower revenue projection for the auto components industry this year mirrors the slowdown in overall demand due to higher interest rates and rising fuel prices.

Auto makers expect a festival-season spurt in sales in the three-four months starting September, but overall annual vehicle sales growth will still be lower. India's biggest car maker by sales, Maruti Suzuki India Ltd., earlier this month said it expects vehicle sales to grow less than 10% this fiscal year.

The industry body said auto component exports last year jumped 54% to $5.4 billion while imports climbed 30% to $8.50 billion.

Exports grew at a rapid pace because of "signs of recovery in North America, western Europe and Asian markets," Mr. Ram said, adding that he doesn't expect growth this year to be as high.

"In fact, the industry would be happy with a 20%-25% [export] growth in this fiscal year," he added.

The auto component industry in India added production capacity valued at $2 billion to $2.25 billion in 2010-11 by setting up several new plants and expanding existing ones, the industry body said.

"The industry is expected to add at least another similar number in capacity addition this financial year," it added

Source: The Wall Street Journal