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Automobile

Maruti and Tata post lower sales in September as weak India demand persists

Automakers are hopeful festive demand will revive sales growth

India's auto industry has been grappling with falling demand as a credit crunch hits consumer sentiment.   © Reuters

MUMBAI (NewsRise) -- Maruti Suzuki India, the nation's top car manufacturer, said sales fell for the eighth consecutive month in September, even as automakers pin hopes on upcoming festivals to ease the slowdown gripping the industry.

The Suzuki Motor unit's sales including exports slumped more than 24% on-year to 122,640 vehicles last month, the company said in a statement on Tuesday. Domestic sales of Maruti's cars, minivans, and sport-utility vehicles fell more than 27% to 110,454 units, while exports slipped 18% to 7,188 units.

India's automobile industry has been grappling with falling demand for more than a year as a credit crunch marred consumer sentiment in Asia's third-largest economy. Carmakers including Maruti have cut production and fired employees because of falling sales. Prime Minister Narendra Modi's government recently took several measures including lowering corporate taxes in a bid to boost demand.

To be sure, Maruti's sales in September turned out to be better than that in the previous month when it suffered a more than 34% slump, one of its worst monthly declines in recent years. Maruti also lowered prices on its models to pass on the benefits of the tax cut to consumers.

Most analysts expect demand to pick up ahead of Diwali, the most prominent Hindu festival, which falls on Oct. 28 this year.

"The upcoming festive season is critical for resurrecting sales volumes in fiscal year 2020," Mumbai-based brokerage Motilal Oswal said in a note last week. "The substantial increase in discounts and the start of the festive season have led to an improvement in sentiment."

Mahindra & Mahindra, maker of Scorpio and Bolero SUVs, reported a 21% slump in total September sales at 43,343 units. The company's passenger vehicles sales declined 33% during this period.

"We are positive that this festive season will augur well for us and the automotive industry," Veejay Ram Nakra, Mahindra's chief of sales and marketing for the automotive division, said in a statement. "This, in addition to factors such as the good monsoon and recently announced positive government initiatives, should help revive the industry in the short term."

Tata Motors reported a 50% slump in total domestic sales at 32,376 units. Its sales of passenger vehicles plunged 56%. However, toward the end of the month, "there was an encouraging response in terms of customer foot falls," Mayank Pareek, president of the passenger vehicles business, said in a statement. The company said its retail sales of passenger vehicles rose 11% in September from the previous month.

Shares of Maruti gained 1% in Mumbai trading on Tuesday, while that of Mahindra closed 1.7% higher. Shares of Tata Motors lost 1.8%, while the benchmark S&P BSE Sensex lost 0.9%.

--Dhanya Ann Thoppil

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