Auto Industry in India is facing the twin problems of Fuel Price Hikes and High Interest Rates which have sharply reduced the growth of the industry.The Indian car companies were riding high in 2010 as the economy grew and many people in India graduated to the middle class.Some companies were showing triple digit growth rate as India become the hottest market in the world.All global car companies were in a rush to expand their India sales and distribution network at any cost.However 2011 has brought them down to earth with almost 50% increase in petrol prices keeping buyers away.On top of that car financing companies have also increased their interest rates for auto loans by around 2-3% which makes the servicing of the EMIs of car loan very difficult.This has made most buyers sit tight and wait for a better environment.The car companies which hiked price to pass on the increasing costs of steel and other commodities are in a pickle.They are being forced to sit on high inventories and can’t afford to give big discounts as well.

The sautomobile industry in India happens to be the ninth largest in the world. It is the fourth largest exporter of automobiles following Japan, South Korea and Thailand. It is the world’s second largest manufacturer of motorcycles, with annual sales exceeding 8.5 million in 2009. Several Indian automobile manufacturers have spread their operations globally. India manufactures over 17.5 million vehicles (including 2 wheeler and 4 wheeler) and exports about 2.33 million every year. India’s passenger car and commercial vehicle manufacturing industry is the seventh largest in the world, with an annual production of more than 3.7 million units in 2010. In the commercial vehicle segment, Tata Motors is leader with a market share of about 64%, whereas Maruti Suzuki is leads the passenger vehicle segment with a market share of 46%. Hyundai Motor India and Mahindra and Mahindra are more interested in expanding their hold in the overseas market. (Source – Wikipedia).