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India's car sales fall at sharpest rate for 20 years

People at car dealership in India
Getty Images

Car sales in India during July fell at the sharpest pace for nearly 20 years, according to new data.

The Society of Indian Automobile Manufacturers (SIAM) said sales of cars to dealerships fell by 30.9% to 200,790 in July - the worst drop since December 2000.

The pace of the decline has accelerated in recent months as a liquidity crunch in India's shadow banking sector has dried up lines of credit to dealers and potential car buyers.

Vishnu Mathur, director general of SIAM, said the fall had wider implications for the Indian economy.

"If this industry goes down, then everything gets hurt. Manufacturing, jobs and revenue to the government," he said.

New car sales fall in July

Car production line

Sales of new cars fell for the the fifth month in a row in July as confusion over the government's policy on fuel types and political uncertainty hit car dealers, according to the Society of Motor Manufacturers and Traders.

Just 157,198 cars were registered last month, down 4.1%.

Orders from business customers were down 22.5%, while purchases from individuals were down 2%.

Sales of diesel cars fell for the 28th month in a row in July. They were down 22.1%.

However, demand for battery cars was up by 158.1% but they still only account for 1.4% of cars on the road.