MUMBAI (NewsRise) - Maruti Suzuki India saw a smart revival in January sales, as surging demand for utility vehicles and new models helped the nation's largest car maker bounce back from December's low when customers halted purchases amid a cash crunch.
The unit of Japan's Suzuki Motor said sales of passenger vehicles rose almost 26% last month to 133,768 units from 106,383 a year earlier.
In December, Maruti's sales had declined for the first time in five months as New Delhi's move to ban high-value currency bills caused a cash shortage in the economy. Many car makers shut down factories for a few days to align production with demand after growth started slipping in November.
The rebound in January was far better than what analysts were anticipating. Mumbai-based brokerage Nirmal Bang had expected the automaker's domestic sales to grow 14% on-year.
Sales of Maruti's cars grew about 18% in January to 103,276, amid a surge in demand for mid-sized and compact cars. The company last month launched a mini cross-over Ignis.
Sales of utility vehicles, including Ertiga, S-Cross and Vitara Brezza, continued to surge with volumes more than doubling to 16,313 units. Maruti, traditionally associated with small cars, has been introducing bigger models to meet the rising demand for such vehicles.
Analysts say Maruti's January sales indicate the waning impact of demonetisation.
"Maruti, being the market leader and witnessing strong demand of its urban-centric vehicles, is currently an outlier among its peers," said Anil Sharma, principal analyst at IHS Automotive. "The recently-launched Ignis crossover is likely to continue driving this trend."
Meanwhile, Mahindra & Mahindra, India's largest sport-utility vehicle and tractor maker, said January passenger vehicle sales slipped 9% to 20,096 units.
"The auto industry continues to see mixed reactions and some of the segments including the rural market and the commercial vehicles category continue to face challenging times," Pravin Shah, president and chief executive of the automotive division of Mahindra, said in a statement.
Shah said he expects the federal government's budget announcements for the next fiscal year to positively impact the economy and the industry. "We are confident that this will lead to a spur in demand."
India's Finance Minister Arun Jaitley Wednesday unveiled a budget that announced increased spending in rural areas and infrastructure in a bid to stimulate growth in Asia's third- largest economy.
Maruti shares gained 4.69%, while Mahindra & Mahindra closed 4.64% higher in Mumbai trading on Wednesday. The benchmark S&P BSE Sensex gained 1.76%.
--Dhanya Ann Thoppil