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Automobile

Maruti Suzuki car sales rise first time in nine months on India festive demand

Automaker's October sales increase 4.5%

India's automobile industry has been grappling with the worst downturn in recent years, prompting companies including Maruti Suzuki India to cut production and fire employees.    © Reuters

MUMBAI (NewsRise) -- Maruti Suzuki India's sales rose for the first time in nine months in October, as strong demand during the festival season helped the nation's top carmaker sidestep a slowdown gripping the automobile industry.

The Suzuki Motor unit's sales including exports rose 4.5% on-year to 153,435 vehicles last month, the company said in a statement on Friday. Domestic sales of Maruti's cars, minivans, and sport-utility vehicles rose 4.5% to 144,277 units, while exports gained 5.7% to 9,158 units.

India's automobile industry has been grappling with the worst downturn in recent years, prompting companies including Maruti to cut production and fire employees. Demand for automobiles in Asia's third-largest economy has been declining amid a credit squeeze that marred consumer sentiment and a growing preference in cities for ride-hailing services such as Ola and Uber. Prime Minister Narendra Modi's government recently took several measures including lowering corporate taxes to help boost demand.

Maruti, which last week reported a 39% slump in quarterly profit, saw its sales in October surge 25% from the previous month. The automaker also lowered prices on its models to pass on the benefits of the tax cut to consumers.

According to Nomura, the industry's passenger vehicles sales in October grew on the back of demand that peaked with Diwali, the most prominent Hindu festival.

To be sure, some analysts say it is too early to call it a recovery.

"The second half of fiscal year 2020 is likely to be difficult, with inventory clean up likely to gain steam," Mumbai-based brokerage Dolat Capital said in a note. The emphasis on bringing down inventory and transition to the new Euro VI fuel standards may weigh on the volume growth and pricing power, it said.

Mahindra & Mahindra, the maker of Scorpio and Bolero SUVs, reported an 11% drop in total October sales at 51,896 units. The company's passenger vehicles sales declined 23% during this period.

Mahindra's retail sales volumes exceeded wholesale dispatches by approximately 40% during the month, said Veejay Ram Nakra, the company's chief of sales and marketing for the automotive division. "Our billing numbers are in line with what we had planned for the month, since the objective was to significantly correct our channel inventory," he said in a statement.

Shares of Maruti gained 0.8% in Mumbai trading on Friday, while that of Mahindra closed 2.8% lower. The benchmark S&P BSE Sensex added 0.1%.

-- Dhanya Ann Thoppil

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