Leading Indian car maker, Maruti Suzuki
LEADING Indian car maker Maruti Suzuki on Monday (August 1) reported its sharpest-ever fall in monthly sales due to higher borrowing costs and disruptions to its production.
The fall was part of a wider decline in vehicle sales due to rising prices of fuel and raw materials plus more expensive loans, which also hit rival firms including Tata Motors and Hyundai India.
New Delhi-based Maruti, which is majority-owned by Japan's Suzuki Motor Corp said that it sold 75,300 units in July, down a massive 25.3 per cent from a year earlier.
A company spokesman, speaking on condition of anonymity in line with company policy said that it was the biggest drop in monthly sales since it started operations in India in 1983.
Tata Motors said it sold 63,761 commercial and passenger cars in the same period, down six per cent year-on-year.
Its flagship small car, the Nano, sold just 3,260 units - down 64 per cent year-on-year.
India's second-largest car maker Hyundai Motor India sold 49,667 units, a dip of 1.48 per cent decline from a year earlier.
US giant Ford's subsidiary, Ford India, on the other hand saw sales grow 10.75 per cent to10,706 units in July, aided by continued strong sales of its Figo model.
Car sales in India - seen as an indicator of the country's economic health - have been slowing in recent months after breakneck growth for nearly two years with buyers delaying purchases due to higher interest rates and fuel prices.
Indian auto makers have also been forced to push up prices of vehicles by an average four per cent in the past year, led by higher steel and rubber prices.
Last week, India's central bank raised interest rates for the 11th time in 17 months to battle near double-digit inflation in a move that hiked borrowing costs for consumers.
"Rising input costs have delayed purchases and regular interest rate hikes have hit business confidence and the willingness to buy goods," said Jagannadham Thunuguntla, head of research with SMC Global Securities.
Mahantesh Sabarad, of Fortune Equity Brokers in Mumbai said that the environment for auto sales will be "challenging", with rate hikes and high inflation major dampeners.
Maruti said while the overall automobile market had turned sluggish, sales also fell due to a planned shift in production of its super-compact Swift Dzire cars.
Analysts said that the longer-term sales outlook is still strong for India, where just one in 10 households in urban areas and one in 50 in rural areas own cars.
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