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Automobile

India passenger vehicle sales expand 5.1% in December

Car demand declines as customers increasingly opt for SUVs

MUMBAAI (NewsRise) -- Passenger vehicle sales in India grew a tepid 5.1% in December as demand for cars fell amid a sustained shift in consumer preference to sport-utility vehicles.

According to data from industry group Society of Indian Automobile Manufacturers, or SIAM, sales of passenger vehicles, including cars, SUVs, and vans, rose to 239,712 units last month from 227,823 a year earlier. Sales had surged 14% in November as dealers restocked inventory after the festival period.

Car sales fell 0.2% to 158,326 units in December, while SUVs recorded a 15% jump to 67,073 units amid rising demand for models such Maruti Suzuki India's Vitara Brezza, Jeep's Compass and Hyundai Motor's Creta.

Automobile sales in India are counted as factory dispatches and not retail sales.

Domestic passenger vehicle sales at Maruti, the nation's largest car maker, rose 11% in December. The automaker's sales fell short of expectations weighed by a one-week maintenance shutdown at its plants.

Second-ranked Hyundai Motor reported little change in December sales as it faced supply chain constraints.

"There is a visible trend of buyers increasingly preferring compact SUVs," said Anil Sharma, principal analyst at IHS Markit. "We also note that buyers are shifting from entry-level hatchbacks to premium ones like Maruti Baleno."

SIAM expects sales of passenger vehicles to grow 9% this fiscal year ending in March, similar to the year-earlier period. The industry body had earlier predicted the domestic automobile industry to grow between 8% and 10% this financial year. Sales increased 8.1% to 2.4 million units between April and December.

Domestic sales of trucks and buses jumped 53% in December to 82,362 units, aided by the high year-end discounting. Tata Motors reported 62% jump in commercial vehicles while smaller rival Ashok Leyland posted a 79% increase.

Sales of two-wheelers jumped 41% in December to about 1.29 million units.

Shares of Maruti lost 0.5%, while that of Tata Motors gained 0.5% and Ashok Leyland closed 0.7% lower in Mumbai trading. The benchmark S&P BSE Sensex gained 0.2%.

--Dhanya Ann Thoppil

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