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03. July 2011

Maruti Suzuki India lowers sales growth forecast to 8pct

Maruti Suzuki India Ltd the country’s largest car maker has had its sales growth target for the current year lowered from the earlier projection of 13% to 8%. That would bring sales to 1.18 million vehicles in 2011-12.

A Reuters report from Tokyo quoted Mr Osama Suzuki chief executive officer of Suzuki Motor Corporation, the parent company reported that “With inflation and other issues, a decision was made to lower the sales growth forecast. I personally think 5% rise would be about right.”

MSIL sold 1.13 million vehicles, posting growth of 30% in 2010-11. The company had a market share of about 45%. If one assumes the passenger vehicle segment would grow at 14% to 16% (the revised forecast of Siam, the Society of Indian Automobile Manufacturers), at a growth rate of 8%, MSIL's market share would fall to around 42% this year.

Rising interest rates and high fuel prices have been taking a toll on automobile companies over the past two months. After recording a scorching growth rate of 29% in 2010-11, the passenger car industry slowed to a 20 month low at seven per cent growth last month. Auto makers sold 158,817 cars in May compared with 148,425 units in the year ago period.

MSIL reported 4% growth in domestic sales at 93,519 units. But its bread and butter compact car segment, sensitive to fuel prices and interest rates, reported a fall of three per cent.

A senior executive said that “Rising interest rates and increase in the price of petrol have made consumers defer purchases, specially at the entry level. The conversion rate in the industry has come down to 15% from the earlier recorded 20%.”

Sourced from steelguru.com

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