New Delhi: Auto industry in the country is expecting sales to slow down as the biggest ever hike in petrol price happened in the last week. This hike happened at a time when the market is already reeling under pressure from high interest rates on auto loans.

Industry players also feel that till diesel prices are de-regulated and a significant difference of prices between the two fuels exists, demand for diesel-driven cars will rise.

Director General of Society of Indian Automobile Manufacturers General Vishnu Mathur said, "We have already seen reduction in passenger car growth last month due to higher interest rates and hike in commodity prices. With petrol prices going up, demand will further beimpacted, mainly on short-term.”

Car sales in India posted the slowest growth rate in 22 months in April this year at 13.18 per cent, mainly due to rising interest rates and declining consumer confidence.

The country's largest carmaker Maruti Suzuki India (MSI) said if the fuel prices increase at this rate, the industry will suffer severely.

"At some point of time, there will be a big negative impact on petrol cars as well as the overall industry, because diesel prices are also rising," MSI Chief General Manager(Marketing) Shashank Srivastava said.

Rival Hyundai Motor India Ltd (HMIL) also said there will be impact on car sales, although it may not be a massive one.

Expressing similar sentiments Volkswagen Group Sales India Pvt Ltd Member of Board Neeraj Garg, said, "It is going to keep the customers away from purchasing cars in the shortterm mainly because of the psychological impact."

For the next one to two months there will be a dip in demand, Garg added.

General Motors India Vice-President P Balendran said petrol price hike is "definitely a dampener" and footfalls in car showrooms will come down considerably in the near future.

He also said although disposable income may have gone up in the last few years, high inflation in recent times has left consumers with less spending power.