Car sales in China and India have slowed as inflation and soaring fuel costs have begun to take their toll on demand in the market.

The countries have emerged as major players in the automotive industry and have been making up for slumping transactions in the West in the past few years.

However, car sales rose just 6.8 per cent year-on-year in China during July - the slowest growth for two years - while sales dropped in India for the first time in about three years.

The slide has been marginally offset by a sales surge in resources-rich Russia and Brazil, but Morgan Stanley now expects global car sales to fall by 0.3 per cent this year to 58.1 million.

The investment bank's Auto Analyst Adam Jonas said: "China is almost three times the size of the Russian car market so for every one percent reduction in Chinese sales you need a Russian rise of 3 percent to offset that."

China, which has the world's second largest car market, will still contribute heavily to sales but the upshot of the current climate is that competition between automakers will be increased.

If domestic growth continues to cool in the country over the coming months, there is strong speculation that it may ramp up plans to expand into the export market.


Source:
China Slowdown Fuel Tougher Race for Carmakers (01/09/08)
http://www.reuters.com/article/reutersEdge/idUST8376620080901?sp=true