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Automobile

India automobile sales fall for 11th month in September

However, demand begins to recover as festive season starts

Cars are seen parked at Maruti Suzuki's plant at Manesar, in the northern state of Haryana, India, 2019.   © Reuters

MUMBAI (NewsRise) -- Passenger vehicles sales in India recorded the 11th straight month of decline in September, but the beginning of the annual festival season raises hopes of a recovery in demand.

Sales of passenger vehicles plunged 24% to 223,317 units last month, the Society of Indian Automobile Manufacturers, or SIAM, said in a statement on Friday. Cars witnessed a more than 33% slump to 131,281 units, but sport-utility vehicles reversed the declining course to report a 5.5% increase. SIAM's automobile sales are counted as factory dispatches and not retail sales.

India's automobile industry has been contending with one of the worst-ever downturns as consumers cut back on spending amid a slowdown that gripped Asia's third-largest economy. India's gross domestic product expanded at the slowest pace in five years in April-June as banks tightened credit in the face of ballooning bad debt levels. Several car makers, including Maruti Suzuki India, the nation's top auto maker, have cut production and fired employees because of the falling sales.

Still, a slew of government measures, including a sharp cut in corporate tax rates, announced just ahead of the annual festival season between September and October, have helped spur demand in the past few weeks, the industry body said.

"The start of the festive season this year has been good. The sales in the last 10 to 12 days have been better than last year," Rajan Wadhera, president of SIAM, told reporters at a news conference in New Delhi. "We are seeing some green shoots."

The uptick in the sales has also been fueled by the price discounts and "positive sentiment" generated by the recent measures announced by the government, Wadhera said.

Last week, Maruti reported its eighth straight monthly decline in sales in September with a 24% drop in dispatches. The Suzuki Motor unit's production, too, dropped for the eighth straight month.

Mahindra and Mahindra, the maker of Scorpio SUVs, reported a 21% drop, while Tata Motors, India's largest automaker in terms of revenue, reported a 50% slump in domestic sales. Sales of Tata cars and SUVs plunged 56%.

SIAM's Wadhera expects sales growth to pick up in the second half of the year, also given the low base in the year-earlier period.

To be sure, analysts remain wary of a recovery. "While the auto sales during September demonstrated month-on-month improvement and October sales are likely to follow a similar trend, it will be too early to call for a demand recovery," J.M. Financial said in a report. "Volume growth outlook for the rest of the year depends on customer sentiment post the festive season."

Domestic sales of trucks and buses fell more than 39% to 58,419 units in September. Sales of two-wheelers declined more than 22% to about 1.66 million units, the SIAM data showed.

-- Mukesh Jagota and Dhanya Ann Thoppil

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