* FY12 car sales forecast to grow 2-4 pct, vs pvs 10-12 pct
* Commercial vehicles may grow faster than earlier estimated
* Sept domestic car sales fall 1.8 pct (Adds details, quotes)
NEW DELHI, Oct 10 (Reuters) - Car sales in India are expected to rise just 2 to 4 percent this fiscal year, an industry body said, cutting its forecast for the second time this year, as high interest rates and rising costs continue to hit demand in Asia’s third-largest economy.
The growth forecast is down from the earlier estimate of 10 to 12 percent by the Society of Indian Automobile Manufacturers (SIAM), and 16 to 18 percent before that. Car sales had jumped 30 percent in the fiscal year 2010/11 that ended March.
“If the government continues to raise fuel prices and interest rates continue to go up the demand for cars will remain subdued,” S Sandilya, President, SIAM and Chairman, Eicher Motors , told reporters.
Indian car sales last grew in single digits in 2008/09, at 1.39 percent.
Demand for cars in the world’s second-fastest growing auto market after China has also been dented in recent months by rising vehicle costs, with many first-time buyers plumbing for motorcycles or scooters.
Car sales fell 1.8 percent in September to 165,925 cars, data released by SIAM showed on Monday. Demand for cars shrunk in July for the first time in nearly three years.
However, sales of commercial vehicles, a key pointer to the country’s economic activity, rose 18.05 percent to 70,634, while motorcycle sales rose 19.93 percent to 933,465 vehicles.
India’s central bank has raised interest rates 12 times since March last year in an effort to battle stubbornly high inflation, a move that has hurt credit-based purchases and slowed economic growth.
The Indian car market, which saw a 10 percent decline in August, is driven by a burgeoning and aspirational middle class that mostly relies on bank loans for purchases.
Maruti Suzuki , India’s largest car maker, and 54.2 percent owned by Japan’s Suzuki Motor Corp , posted a 21 percent drop in September sales, but rival Tata Motors , which makes both commercial vehicles and cars, reported a 22 percent increase for the month.
“The way things have been going in the last few months, this is a realistic number. While there is some uptick in festive demand, it’s nowhere close to what it was in the last two years,” said Vineet Hetamasaria, auto analyst at Mumbai’s PINC Research.
SIAM raised its growth forecast for commercial vehicles to 13 to 15 percent, from the earlier forecast of 12 to 14 percent.
“Demand for movement of goods still remains, because the economy is still growing at 7 to 8 percent,” SIAM’s Sandilya said. (Reporting by Sanjeev Choudhary; Writing by Prashant Mehra; Editing by Aradhana Aravindan)