India’s largest carmaker Maruti Suzuki expects to post single-digit sales growth this fiscal year, a far cry from its 25 per cent rise last year, as rising interest rates and prices in Asia’s third largest economy force consumers to tighten their purse strings.
Car sales in India, the world’s second-fastest growing major auto market after China, fell 16 per cent in July, their first drop in two-and-half years, after rising a breakneck 30 per cent in 2010.The Indian car market is now expected to grow by just 10 to 12 per cent this fiscal year, down from an earlier forecast of 16 to 18 per cent, the Society of Indian Automobile Manufacturers said last month.“If you ask me, we will not reach a double-digit,” Chairman R.C. Bhargava told reporters, referring to both Maruti and the India car sector.Maruti, which sells nearly half of all passenger cars in India, posted a record 25-per cent slump in July sales.The company, 54.2 per cent owned by Japan’s Suzuki Motor, has cut production of most models in August, including its best-selling model Alto, as inventories were rising and there was no place to store cars, marketing and sales chief Mayank Pareek said.
Maruti is facing intensifying competition from the likes of South Korea’s Hyundai Motors, the second-largest car maker in India, as well as domestic rivals.Bhargava said he expected the Indian car market to pick up speed in two to three months as the festive season kicks in.The Indian festive season peaks in November, during the Hindu festival of Diwali, when it is considered auspicious to buy big-ticket items and when most employees get their annual bonuses. But sales are also driven by discounts at that time of year.
India’s population of 1.2 billion and the common sight of families of four riding motorcylces creates potential for massive demand, but the pressure is sure to remain in an industry spurred by a burgeoning and aspirational middle class that relies mainly on loans to buy cars.
India’s central bank has raised interest rates 11 times since March last year in an effort to battle stubbornly high inflation, a move that has hurt car purchases, most of which are financed through loans.Still, Bharghava was optimistic. “Fundamentals here are very strong. There is still a huge domestic potential demand,” he said.
Maruti Suzuki has reported a 25.33 per cent dip in sales at 75,300 vehicles in July, compared to the like month of 2010, as sluggish demand and two scheduled production cuts.
The manufacturing of the sedan model Swift Dzire was shifted from Manesar to Gurgaon, temporarily affecting the production of the car, the company said in a statement.
From / Gulf News