India car sales up 8.3% but 2012 outlook trimmed

India's car sales jumped by 8.3 percent in June from a year earlier, an auto industry body reported Tuesday, adding it was still hoping for double-digit annual growth despite a sharply slowing economy. Passenger car sales should rise by nine to 11 percent for the year thanks to expected interest rate cuts that would reduce vehicle financing costs and spur demand, the Society of Indian Automobile Manufacturers (SIAM) said. "We're hoping car demand will bounce back, possibly around the festival time" when it is considered an auspicious time to buy, SIAM director general Vishnu Mathur told a news conference. India's market outlook is of key importance to global automakers from General Motors to Toyota that have been steering to India and neighbouring China to boost sales and counter saturated demand in developed countries. SIAM's car sales forecast for the year to March 2013 was down slightly from its earlier one in April of 10 to 12 percent annual growth. It blamed the reduction in the forecast on the slowing economy but said it expected an easing of India's high interest rates, significant price discounting and the rollout of new models to support its new annual forecast. The projection was far higher than last year's performance when sales growth slowed to 2.2 percent, hit by a sharp rise in interest rates and manufacturing supply problems. Some 155,763 cars were sold in June in India, up from 143,851 a year earlier, the SIAM figures showed. The June jump in car sales, the eighth monthly increase in a row, was driven by heavy price discounts and a surge in demand for diesel models whose fuel is heavily subsidised by the government.