Due to the reduction in interest rates and inflation in 2012, the car sales are to bounce back, according to Deloitte, the research organization.

According to the report of Deloitte, because of the macroeconomic issues like high interest rates, constrained growth in actual disposable income, and the increasing price in fuel, the sales in passenger cars has hit down.

It said ever since July 2011, there is decline in the sales of car, recording degrowth, in comparison to the previous year. It is not going to improve unless and otherwise, the macroeconomic aspects gets enhanced. In the FY of 2011-12, the sales in car are expected to improve by a slender margin of 2.3 percent in evaluation to the 30 percent increase in the 2010.

The increase in fuel price was specified by the report, which said it has escalated to 34 percent, ever since the deregulation in the year 2010.Moreover the relentless pressures in inflation have led to the constant surge in banks’ lending rates, which has come to around 13 to 14 percent of the latest car loans.

Deloitte states that since there are very less infiltration for cars in India, the sales in immediate future are likely to bounce back.

Kumar Kandaswami, the senior director of Deloitte India said that the present slump in car sales will not remain for long as the basics in the growth of car sales like, car density and urbanization, are still very pretty good.

The Reserve bank of India anticipates that in the year 2011, the Inflation will improve to a reasonable 7% and the sensible interest rates will once again provide an atmosphere that is conducive for the automakers.

The study reveals that top four automobile giants Maruthi Suzuki, Mahindra and Mahindra, Tata motors and Hyundai makes up eighty percent of the sales in passenger cars, thereby creating an extremely concentrated market.