Thursday, 1 August 2013

Maruti Suzuki's July Sales Rise, Mahindra Posts Drop

Maruti Suzuki India Ltd. (532500.BY) posted in July the first increase in total vehicle sales in seven months, mainly because of a lower sales base in the year-earlier period when it temporarily shut a factory after violent labor unrest.

Sales increased a marginal 1.3% in the previous month to 83,299 vehicles, the Suzuki Motor Corp. (7269.TO) said. Local sales grew 5.8% to 75,145 autos. Exports fell however 27% in July to 8,154 autos due to weak demand in Europe, one of Maruti's overseas markets.

The company last recorded a growth in monthly vehicle sales in December. Car sales in India are counted as factory dispatches and not retail sales.

Maruti, India's largest car maker by sales, locked out its plant at Manesar in the northern state of Haryana on July 21, 2012, after hundreds of workers rioted and set a part of the factory on fire. The Manesar plant's human resources manager was killed in the incident and more than 100 people, including company executives and policemen, were injured.

Maruti reopened the plant--which produces its best-selling Swift and Dzire diesel cars, on Aug. 21. The company has also another plant at nearby Gurgaon.

Sales of cars and sport-utility vehicles in India have continued to stay weak for more than a year due to variety of factors, especially higher loan rates and rising fuel prices. At the same time, a sluggish economy has heightened fears of job losses, leading potential customers to keep their purchasing decisions in abeyance.

Maruti and other car makers are offering price rebates and financing schemes to push sales. They are also introducing new models.

Mahindra & Mahindra Ltd. (500520.BY), India's largest SUV maker by sales, said its total vehicle sales in July declined 21% from the year-earlier to 37,096 autos. The figure included local sales of 34,490 vehicles, a decline of 19% from the year earlier. Exports slumped 39% to 2,606 autos.

In Mahindra's core business of SUVs and the Verito compact car, sales dropped 29% to 15,530 vehicles. Sales of four-wheeled passenger and goods carrying commercial vehicles fell 6.4% to 13,740 vehicles.

"Over the last few months, the auto industry has been going through one of its worst phases of the last decade with planned shutdowns being taken by companies to correct demand-supply mismatch," said Pravin Shah, chief executive of Mahindra's automotive division.

He asked the Indian government to cut factory taxes on automobiles--which would lead to lower vehicle prices--to revive sales.

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