No fireworks for auto makers this Diwali

The domestic automobile industry reported a lacklustre festive season with most car makers witnessing sales below expectation in October, which had festivals like the Navratris and Diwali, considered among the most auspicious times to buy vehicles in India.

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Market leader Maruti Suzuki reported a growth of just 1% during the month as its sales remained below the psychological 100,000 unit mark despite the Ciaz launch during the month. One reason, the company said, was that its factories operated for only 19 days on account of festivities and elections in Haryana. Maruti has warned that the second half may lag the first half due to the higher base of last year.

"Last year, the second half was way better than first so we are carrying a high base," said RC Bhargava, chairman, Maruti Suzuki India Ltd. "So the percentage growth in second half would not be as high, but volumes would still grow. For the full financial year we should still grow by over 10%."

Car makers only provide wholesale figures at the end of every month, which indicate the number of cars despatched from factories to the dealerships, and not the actual sales to customers. Hyundai and Honda were the only other companies to show any growth largely on the back of their new launches, Elite i20, Xcent, new City and Mobilio.

Others had a near forgettable month. General Motors was the worst performer reporting a decline of nearly 45% while homegrown Mahindra and Mahindra (M&M) and Tata Motors witnessed a steep 16% and 18.5% decline in sales respectively.

"Our sales for the month of October remain subdued on the back of overall sentiment and high interest rates," said Pravin Shah, chief executive, automotive division & international operations, M&M.

A protracted slowdown in demand had seen sales decline for two past two fiscal years. Sales recovered to grow for four months till August, but September saw a surprise decline, and the lack lustre show in October is further cause of worry for the industry.

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