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Maruti Suzuki sales fall for second month as south Indian flood hurts demand

Flood-hit Kerala state accounts for about 8% of Indian auto sales

Sales of Maruti Suzuki's Vitara Brezza SUV and Ertiga minivan declined more than 16%.    © Other Provider(90days)

MUMBAI (NewsRise) -- Maruti Suzuki India, the nation's largest auto maker, saw a second consecutive month of sales decline in August after heavy rains and floods in southern India hurt demand for cars and sport-utility vehicles.

Total sales fell 3.4% to 158,189 units last month, the Suzuki Motor unit said in a statement on Saturday. Domestic sales of Maruti's cars, minivans, and SUVs fell 2.8% to 147,700 units, while exports declined more than 10% to 10,489 units.

Demand for Maruti's compact cars such as Swift and Baleno declined 3.6% last month, while sales of Vitara Brezza SUV and Ertiga minivan declined more than 16%.

Sales during the month were adversely affected due to severe floods in Kerala and heavy rains in other parts of the country, Maruti said.

The southern Indian state of Kerala was affected by the worst floods in a century last month, killing scores of people and forcing hundreds of thousands to abandon their homes. The calamity wreaked damages worth billions of dollars, bringing life in the state to a grinding halt.

"This is likely to hurt auto sales considering Kerala accounted for 8% of overall passenger vehicles sales, 4% in two wheelers and 5% in three wheelers in fiscal year 2018," brokerage Edelweiss said in a note. As the floods have coincided with the state's main festival of Onam that marks the peak demand season, "the impact in the near term could be acute."

According to the brokerage, Kerala accounts for about 8% of Maruti's overall sales, while for smaller rival South Korea's Hyundai Motor, the state contributes 6% to sales.

Maruti had witnessed a decline in sales in July, too, thanks to the year-earlier period witnessing a surge in stocks as dealers bulked up inventories following the rollout of a new nationwide Goods and Services Tax.

Hyundai Motor, the second-largest carmaker in India, reported a 3.4% increase in sales to 61,912 units in August, helped by a surge in exports. However, its domestic sales declined 2.8%.

Mahindra & Mahindra, India's second-largest SUV maker, reported a 14% rise in August sales to 48,324 units.

Tata Motors reported a 27% jump in overall sales last month. Its compact cars and SUVs, including new Nexon crossover, drove 28% jump in domestic passenger vehicle sales.

Shares of Maruti and Mahindra lost 1.9% and 2%, respectively, in Mumbai trading. Shares of Tata Motors closed down 0.2%, while the benchmark S&P BSE Sensex ended 0.9% lower.

--Dhanya Ann Thoppil

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