December car sales signal continued growth

Maruti Suzuki, India's largest car maker, joined peers in reporting strong December vehicle sales, underlining robust growth momentum in one of the fastest growing auto markets.

Maruti and local rivals including Tata Motors and Mahindra & Mahindra face rising competition as global carmakers expand operations in India and launch new models aimed at tapping India's growing middle-class. "India is still a small market but it will be really big in the next five-seven years. That growth potential is drawing all the car makers here," said Umesh Karne, auto analyst at Brics Securities in Mumbai. Maruti, 54.2%-owned by Suzuki Motor Corp, said on Tuesday its sales rose 17% to 99,225 vehicles in December versus a year ago. "The competition has been building up for some years now, but the key parameters remain the same -- good products, competitive pricing and good after-sales service," RC Bhargava, chairman of Maruti Suzuki, said. "Our sales numbers would have been higher were it not for a six-day planned maintenance shutdown in December," Bhargava told Reuters. Domestic passenger vehicle sales have grown 32% between April and November, according to industry body Society of Indian Automobile Manufacturers. Industry data through December will be released next week. Shares of Maruti, with a market value of USD 9.2 bn, rose 1% to out-perform the broader market. The company, whose top-selling car is the small Alto, makes about 3,800 vehicles a day and is targeting annual production of 1.85 mn by end-2012. Most carmakers, including Indian units of foreign companies , posted double-digit percentage growth figures in December. Ford India's sales jumped 172% from a year ago to 4,301 units in the period. Honda Siel Cars India, the Indian unit of Japan's Honda Motor Co posted a 20% growth in December sales. Toyota Motor Co's Indian unit sold 5% more cars in December, while Hyundai Motor Group's sales in India rose 17% in the same period. General Motors India, which plans to launch six new vehicles and invest USD 500 mn over the next two years, posted a 4% rise in December sales. Volkswagen December sales in India soared 14 times, driven by launches of its small car Polo and sedan Vento. Sales of the Nano, Tata Motors' so-called 'People's Car', which had fallen to a low of 509 units in November following incidents of the car catching on fire and poor financing facilities, rebounded to 5,784 in December, coinciding with a new marketing and financing strategy. Tata Motors said on Saturday passenger vehicle sales increased 28% for the month. A report by Fitch Ratings released on Monday said the passenger vehicle category would grow between 12 and 15% in calendar year 2011, driven largely by a growing middle class and easier financing options.