VoteUpIndia

The automobile industry has begun the new financial year where it left off the last with another spectacular leap in sales in April, but a severe capacity crunch is threatening to be a blight on growth.

Passenger car sales overlooked price hikes to rise 40% while two-wheeler sales increased 22.07% in April. Likewise, commercial vehicles rode a swell of investments in infrastructure to jump more than 64%.

But the industry is in no mood to celebrate because of stresses and strains on capacity. Society of Indian Automobile Manufacturers (SIAM) says the sector will clock 10-14% growth in 2010-11 compared to a 26% growth a year ago.

Consultants, industry experts and auto CEOs say demand forecasts have halved because of capacity troubles.

“A number of vehicle makers as well as key suppliers cut back on production when the slowdown hit. Since the demand turnaround was faster than expected, the capacity crisis has hit the sector suddenly,