Indian Auto Makers See Mixed Fortunes in June
07/02/2012| 05:23am US/Eastern
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--Sales at Maruti Suzuki rise 20%, Mahindra gain 16%
--Tata Motors' car sales fall 22%, local sales flat at Hyundai
--Sales down 6% at Bajaj Auto, 8% at TVS Motor
(Rewrites; adds sales of Maruti, Hyundai, Ford, GM, Bajaj and TVS)
By Nikhil Gulati
NEW DELHI--Top auto makers in India have reported contrasting sales numbers for June with some of them benefiting from strong demand for diesel vehicles and the others struggling to overcome an overall slowdown in the economy.
Maruti Suzuki India Ltd. (532500.BY), the country's largest car maker by sales, Monday posted a 20% rise in sales to 96,597 vehicles in the past month as it increased the production of diesel-powered vehicles such as the Swift Dzire sedan and the Swift small car.
Sales at Mahindra and Mahindra Ltd. (500520.BY), India's largest utility vehicle maker by sales, grew 16% to 41,322 units, mainly helped by robust demand for its recently launched XUV500 sport-utility vehicle.
At Tata Motors Ltd. (TTM) India's largest vehicle maker by revenue, car and SUV sales slid as much as 22% to 17,244 units as demand for its Indica-branded hatchbacks and Indigo sedans continued to remain weak.
The government subsidizes diesel due to its direct impact on inflation -- most of India's trucks and trains run on diesel -- while fuel-marketing companies are free to change gasoline prices. This has left a huge gap between the prices of the two main transportation fuels.
Maruti in June said it is producing 30% fewer gasoline engines due to lower demand for vehicle that use the fuel.
The local unit of Hyundai Motor Co. (HYMLY), which mostly sells gasoline vehicles, posted flat local sales at 30,450 vehicles in the past month.
At Ford Motor Co.'s (>> Ford Motor Company) Indian unit, sales fell 11% to 6,257 vehicles. Sales of General Motors Co. (GM) in India also fell 11% to 7,364 units.
Auto sales have also been hit by weak sentiment caused by slowing growth in the economy, inflationary pressures and high interest rates.
India's economy grew 5.3% in the January-March quarter, its slowest pace since early 2003. Also, the central bank raised interest rates 13 times between March 2010 and October 2011 to tame inflation.
The weak demand forced some auto makers to halt production at their factories to reduce piling stocks. Tata Motors shut truck and bus production for six days in June, while the local unit of General Motors observed two no-production days at its factories.
Two-wheeler makers too felt the brunt of the demand slowdown.
India's second-biggest motorcycle maker, Bajaj Auto Ltd. (532977.BY), sold 345,162 vehicles during the past month, down 6% on year. TVS Motor Co.'s (532343.BY) sales declined 8% to 168,693 units.
Write to Nikhil Gulati at nikhil.gulati@dowjones.com
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