Leading Indian carmaker Maruti Suzuki is cutting production this month due to a demand slowdown triggered mainly by higher interest rates and fuel prices, reports said Saturday.
The Japanese-owned carmaker, which sells nearly half the cars in India, reported earlier in the month that its sales had fallen by 25.3 percent in July from a year earlier, the company's sharpest ever monthly fall.
"We have reduced the production of all the models except (the sedan) Swift and DZiRE this month. The market is not doing good now," Maruti managing director Shinzo Nakanishi was quoted as saying by the Press Trust of India.
Car sales in India -- seen as an indicator of the country's economic health -- have been slowing after breakneck growth for nearly two years with buyers delaying purchases due to higher interest rates and fuel prices.
India's central bank has hiked interest rates 11 times since March 2010 in a bid to tame near double-digit inflation.
The sales downturn comes as global manufacturers such as Ford, Renault-Nissan and General Motors have been turning to India and China to help offset saturated markets in the West.
Overall Indian car sales slid almost 16 percent in July from a year ago, their biggest drop in nearly three years, as steeper borrowing costs kept buyers out of the showrooms, industry data this week showed.
The Society of Indian Automobile Manufacturers had projected growth of 16 to 18 percent car sales growth for the year but now has revised the target down to 10 to 12 percent and says that it may cut the figure again.
"Both the industry and Maruti Suzuki will not achieve double-digit growth during this fiscal (year)," Maruti chairman R.C. Bhargava said.
India's car sales grew by a blistering 30 percent to 1.98 million units last year when borrowing costs were lower and an increasingly affluent middle class snapped up new models.
Analysts say that the longer-term vehicle sales outlook is still strong in India, where just one in 10 households in urban areas and one in 50 in rural areas own cars.