India's Maruti shows record fall in monthly sales

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MUMBAI: Leading Indian car maker Maruti Suzuki on Monday reported its sharpest-ever fall in monthly sales as demand for cars slowed due to higher borrowing costs and production of some of its models was halted.

The New Delhi-based firm, majority-owned by Japan's Suzuki Motor Corp, said it sold 75,300 units in July, down a massive 25.3 percent from a year earlier.

A company spokesman, speaking on condition of anonymity in line with company policy, told AFP it was the biggest drop in monthly sales since it started operations in India in 1983.

Car sales in India -- seen as a bellwether of the country's economic health -- have been slowing in recent months after breakneck growth for nearly two years with buyers delaying purchases as loans get costlier and input and fuel costs rise.

Last week, India's central bank raised interest rates for the 11th time in 17 months to battle near double-digit inflation in a move that hiked borrowing costs for consumers.

Maruti said while the overall automobile market had turned sluggish, sales also fell due to a planned shift in production of its super-compact Swift Dzire cars.

Production of the Dzire was moved from one factory in Manesar, in northern Haryana state, to nearby Gurgaon, temporarily affecting output, according to a company statement.

The company also stopped new deliveries of the old version of its Swift model in July, before the planned launch of a new version in mid-August. Sales of the old model fell by 97 percent year-on-year as a result.

Maruti had also reported a drop in sales in June after a strike that stopped production of cars for 11 days when workers at its Manesar plant downed tools to demand recognition of a new union.

The walkout cost Maruti nearly $93 million and hit the production of about 12,600 cars, mainly the Dzire and SX4 models.

Maruti's small car models, including the popular M-800, Alto and A-Star, as well as the SX4 and Dzire plus the multi-utility-vehicle segment all posted lower year-on-year sales in July.

But auto analysts say the longer-term sales outlook is still strong for India, where just one in 10 households in urban areas and one in 50 in rural areas own cars.