Mumbai: Maruti Suzuki India Ltd, maker of half the cars in the country, posted its slowest sales growth in four months in July as rising interest rates and accelerating inflation dampened demand.
Sales climbed 1.1% last month to 58,543 cars, vans and sport utility vehicles, the New Delhi-based unit of Suzuki Motor Corp. said in a statement on Friday.
Domestic sales grew 0.1% to 52,911 units, while exports climbed 11%, Maruti said.
Interest rates at a seven-year high and the fastest inflation rate in 13 years due to a surge in fuel prices are squeezing consumer spending in India.
Sales of Maruti’s M800 hatchback and Omni minivan, which account for one-fifth of total local sales, fell 15% to 11,206 vehicles from a year earlier.
“The trend of slowing sales growth is likely to continue for the next couple of months,” said Ashutosh Goel, an analyst with Edelweiss Capital Ltd in Mumbai, who has an “accumulate” rating on the Maruti stock. “Sales may be flat, or even negative, as interest rates have really shot up.”
Slowing growth puts at risk a government target of tripling car sales to three million units annually by 2015 that had attracted $6 billion (Rs25,440 crore today) of investment from General Motors Corp. and Renault SA.
The country’s second biggest car maker, Hyundai Motor India Ltd, reported a domestic sales growth of just 0.4% at 15,066 units in July, against 15,003 units in the same month last year.
But Hyundai managed to compensate for the domestic sales blues with exports, which rose to 21,086 units, against 13,201 units during the same month last year, up 59.73%.
General Motors India, however, managed to post a growth of 25% in July at 5,706 units, against 4,570 units during the same month last year.
Luxury car maker SkodaAuto India Pvt. Ltd, a part of the Volkswagen Group, reported sales of 1,550 units in July, an increase of 83.4% from the corresponding period last year.
High interest rates and inflation also hit sales growth at Mahindra and Mahindra Ltd (M&M), India’s top utility vehicle and tractor maker by sales.
The company reported a 4% decline in July sales at 18,407 units, against 19,163 units in the same month last year. M&M’s domestic sales in July stood at 17,302 units, a decline of 6% from that in the same month last year, when it had sold 18,536 units.
The company exported 1,105 units in July, an increase of 76% over exports of 627 units in the same month last year, it said in a statement. BLOOMBERG
PTI contributed to this story.