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INDIA: Maruti, Mahindra drive auto sector out of slowdown shadows

By Graeme Roberts | 2 October 2012

Market leader Maruti Suzuki and utility vehicle major Mahindra and Mahindra provided some relief to the intensifying gloom in the Indian auto sector that saw most automakers registering double-digit year on year sales declines in September.

Maruti celebrated its return to near normal production at its Manesar factories with a 12.7% growth in sales to 88,801 units, though the low base effect of last year, when workers at the same factories were on strike, also helped its case, the Hindustan Times reported.

M&M on the other hand, continued its dream run with a 22.4% jump to 23,808 units thanks largely to its newlylaunched Quanto and XUV500. Mahindra again overtook Tata to become the country's third-largest passenger vehicle manufacturer in September.

"We have done well last month as the pull factor for our products remains high," said Pawan Goenka, president, automotive sector, Mahindra and Mahindra.

"The overall sentiment in the industry, however, remains subdued as is visible from the performance of the other companies. I think the market is waiting for one more positive move, maybe a cut in interest rates, for optimism to set in."

The lower-than-expected data dampened hopes of a revival during the upcoming festive season and increased desperation within the industry.

Second-placed Hyundai, with factories near the port city of Chennai, saw its highest ever sales decline in September while Tata Motors' recent revival received a setback with a near 18% drop in sales. The two companies hope the situation will improve from this month, the paper said.

"We expect the suppressed demand would improve on account of festive purchases as the demand peaks during this period," said Rakesh Srivastava, vice-president, national sales, Hyundai Motor India.