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Business

Maruti Suzuki posts slower India car sales growth in February

MUMBAI (NewsRise) -- Maruti Suzuki India, the nation's largest car maker, reported a slower sales growth in February, after the automaker's move to replenish inventories at dealerships had caused sales to surge in January.

Maruti's total sales rose almost 12% in February to 120,599 units. While car sales grew 1.6%, dispatches of utility vehicles, including Ertiga, S-Cross and Vitara Brezza, more than doubled to 17,863 units. Maruti, traditionally associated with small cars, has been introducing bigger models to meet the rising demand for such vehicles.

The automaker's sales had jumped 26% in January as it sent more vehicles to dealerships to replenish stocks. That helped Maruti boost sales in a month when many rivals suffered a fall in demand after New Delhi's move to ban high-value currency bills in November caused a cash shortage in the economy.

Anil Sharma, principal analyst at IHS Automotive, said though Maruti's sales growth slowed in February, the double-digit expansion reflects a "normalized situation" in industry and the figure is "still ahead of our 7.7% growth projection for the overall light vehicle market this year."

Second-ranked Hyundai Motor India, the local unit of South Korea's largest carmaker, reported a 4% increase in local sales to 42,327 units in February. The company saw increased customer visits and purchases as customer confidence returned after the federal budget, said Rakesh Srivastava, the automaker's senior vice president for sales and marketing.

Earlier in February, New Delhi's budget for the fiscal year starting in April proposed increased spending in rural areas and infrastructure in a bid to stimulate growth in Asia's third- largest economy.

Meanwhile, Mahindra & Mahindra, India's largest sport-utility vehicle and tractor maker, continued to face depressed demand. M&M's February passenger vehicle sales slipped 2.3% to 40,414 units.

"The auto industry is seeing some positive trends emerging over the last two months," Pravin Shah, president and chief executive of the automotive division of Mahindra, said in a statement. "With rural sentiments improving, we believe that there will be a turnaround in demand over the next few months."

India's automobile industry is barely witnessing a rebound after a strong monsoon helped boost farm incomes this fiscal year. Rural demand had remained suppressed on the back of two consecutive years of drought. Last year, the government also announced salary and pension hikes for employees in a move that is expected to drive up consumption demand.

Shah said he expects the government move to implement a national goods and services tax that replaces a host of state taxes later this year to provide a boost to the auto industry and the economy.

Maruti shares lost 0.03%, while Mahindra and Mahindra closed 3.13% higher in Mumbai trading on Wednesday. The benchmark S&P BSE Sensex gained 0.84%.

--Dhanya Ann Thoppil

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