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Business trends

Maruti Suzuki sees marginal sales growth in January amid slowing India car demand

Tighter credit and weak economic outlook hurt automakers

Total sales including exports fell 1.6% to 158,076 units last month, the company said in a statement on Monday.   © Reuters

MUMBAI (NewsRise) -- Maruti Suzuki India's sales in January barely grew as slowing demand for passenger cars amid a weak macroeconomic environment weighed on the nation's largest carmaker.

Total sales grew 0.2% to 151,721 units last month, the Suzuki Motor unit said in a statement on Friday. Domestic sales of Maruti's cars, minivans, and sport-utility vehicles grew just 1.1% to 142,150 units.

Sales of the new version of Ciaz midsize car plunged 42% last month, while demand for Maruti's compact cars such as Swift and Baleno fell 3.5%. Sales of minicars Wagon R and Alto grew 0.3%, the company said.

Passenger vehicle sales in the south Asian nation have been tottering since July. The weak sales reflected a slowdown in the overall economy, as fuel prices rose and farm incomes dropped. A credit slowdown in the aftermath of a near meltdown at a major non-banking financial company in October further damped automobile demand.

Weak demand and a falling rupee amid rising commodity costs undermined Maruti's profitability. The automaker's net income fell more than 17% in the third quarter ended in December. The company cautioned that it would struggle to meet a double-digit sales growth for this fiscal year.

Overall passenger vehicles sales in India fell 1% in the third quarter, prompting carmakers to offer steep discounts to clear off inventory. Nomura expects the industry to grow 5% this fiscal year ending 31 March amid hopes for a recovery in demand in the current quarter as the macroeconomic environment improves.

Mahindra & Mahindra, India's second-largest SUV maker, reported a 1% gain in total January sales to 23,872 units.

"There is buoyancy in rural growth, commodity costs are levelling, fuel prices are coming down and we see improvement in foreign exchange movement, which in turn will drive positive customer sentiment," Rajan Wadhera, president of the automotive unit of M&M, said in a statement. Wadhera said the company holds a "positive" outlook as it gears up for the launch of new compact SUV XUV300.

Shares of Maruti gained 5%, while Mahindra closed 1.1% higher in Mumbai trading. The benchmark Sensex index gained 0.6%.

--Dhanya Ann Thoppil

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