Maruti sales 50% up in August, but auto sector still in dumps

An over 50% jump in sales of India's largest car maker Maruti Suzuki in August 2013 may be enough to break the industry's chain of nine consecutive monthly decline but beyond that, there was little to cheer as most other carmakers continued to remain under pressure.

High interest rates, fuel prices and a general slowdown in the broader economy has hit consumer sentiment and kept buyers away from showrooms.

Maruti's growth came on the back of a very bad month in August last year, when it was reeling under the impact of a labour unrest and had to shut one of its factories for over a fortnight. Almost everybody else including Hyundai, General Motors, Toyota and Ford struggled while homegrown auto majors Mahindra and Tata suffered high double-digit decline.

The poor sales performance is most likely to amplify demand for stimulus package from the government.

"The auto industry which is currently going through one of its most challenging phases, is in desperate need of some short-term fiscal stimulus," said Pravin Shah, chief executive, automotive division, Mahindra and Mahindra.

"The weakening rupee, resulting in high inflation, is impacting cost of operations. Immediate action by the government is needed so as not to lose out on the upcoming festive season wherein sales could look up and bring some cheer for the industry."

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