The country's automobile industry, already facing a rough ride, said it will suffer more and may possibly go through a severe slowdown, mainly in the small car segment, after RBI’s decision to tighten the monetary policy.

"Market is already sluggish and going through a slowdown. It may go down further, even beyond last year's deceleration," General Motors India Vice President (Corporate Affairs) P Balendran said.

The possible interest rate hike would affect the small car segment most, he added.

"The growth is happening only in the small car segment. People buying small cars are very cost conscious, so any interest hike will affect the sales," Balendran said.

Echoing similar sentiments, country's second largest carmaker Hyundai Motor India Senior Vice-President (Sales and Marketing) Arvind Saxena said the growth of the automobile industry would come down to single digit from a double-digit growth it witnessed last fiscal.

RBI on Tuesday hiked the short-term inter-bank lending rates (repo rate) and mandatory cash reserve (CRR) by 0.50 per cent and 0.25 per cent, respectively.

Following RBI's decision, leading bankers have already indicated that interest rates for borrowers, including auto loans, could go up by about one per cent.

"... though this will not have much impact on us, but surely the industry is going to be affected, mainly the small car market," Toyota Kirloskar Motor Whole-time Director Shekar Viswanathan said.

In the last few months, leading domestic as well as global auto makers have announced to introduce a number of small cars in India, besides launching new variants of the existing models.