Bank loans to finance vehicle purchases in India has slipped to 4.9% year-on-year at the end of July, less than half of the growth recorded in the year-ago period, indicating a slump in demand for cars and trucks which is in sync with the overall private consumption slowdown. The automobile sector contributes 6.5% to India’s gross domestic product with strong backward linkages with sectors such as steel, plastic, rubber and auto parts. According to Reserve Bank of India’s latest data, the slowdown in demand has been more pronounced in the first quarter of FY20 with outstanding retail vehicle loans shrinking 0.9% to Rs 200419 crore from Rs 202154 crore at the end of March. Last year, same period, banks’ vehicle loans grew 11.2%. “Demand remains low due to lower income growth and slow job creation, besides onerous new registration and insurance norms,” he said. “Studies done in the sector show that auto sales in Asia-Pacific are expected to fall 2-3.5% this year after declining roughly 1% in 2018. Besides India, China, Indonesia, Malaysia are also going through auto slowdown,” the report said. Auto sales in the Asia-Pacific, estimated at around 43-44 million vehicles in the previous year, are expected to drop 2-3.5% this year. Even in Germany, automobile production dipped 12% in the first half of the year, owing to decline in car sale in the US and Canada.