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A worker climbs a container to close its window after unloading cars at a warehouse on the outskirts of the western Indian city of Ahmedabad Feb. 11, 2013. Car sales in India fell an annual 12.5 per cent in January, the third consecutive slide and the fifth in sixth months.AMIT DAVE/Reuters

India's once-booming passenger car sector appeared set for its worst performance in a decade, an industry official said on Monday, as sales slid in January by more than 12 per cent from a year earlier.

Car sales – viewed as a key barometer of overall economic health – slumped by 12.45 per cent to 173,420 units in January from 198,079 units in the same month of 2012, the Society of Indian Automobile Manufacturers (SIAM) reported.

"We now think passenger car sales growth for the (2012-13 financial) year will be in negative figures," SIAM deputy director general Sugato Sen said, adding that "the last time we had a negative was in 2002-03."

"The industry is in tough times," Mr. Sen said.

SIAM had already slashed its passenger sales forecast for the fiscal year to March 31 from an initial 10-12 per cent to 0-1 per cent.

Mr. Sen said there would be no official revision to SIAM'S most recent forecast but added they do not expect a recovery in the final quarter of the year.

Sales so far this financial year are down around 2 per cent on the same period a year earlier, Mr. Sen said.

Consumers have been postponing car purchases with India's economy set to grow at its weakest pace in a decade. Higher fuel costs and steep interest rates have also kept buyers out of showrooms.

Total sales of trucks and other commercial vehicles – seen as another important pointer to economic vitality – slumped by 9.51 per cent to 63,218 units from 69,865 units in the year-ago period, SIAM said.

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