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BW Businessworld

Maruti Posts Third Consecutive Drop In Monthly Sales

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New vehicle sales in Japan plunged by more than a fifth in August as production remained disrupted from the March earthquake, while South Korean brands kept growing thanks to solid gains overseas.

Excluding 660cc minivehicles, sales in Japan dropped 25.5 per cent to 216,510 vehicles, marking the 12th consecutive month of declines and the second-biggest fall on record for August, the Japan Automobile Dealers Association said on Thursday.

The sharp decline came from difficult comparisons from a year earlier, when consumers rushed to replace old cars and take advantage of government subsidies before they expired last September. Compared with August sales from 2009, sales grew 9.5 percent, an official said.

"It was the first time since the (March 11) disasters that sales grew from 2009 levels, so there's a silver lining," said Michiro Saito, general manager at the association. "Automakers are planning to ramp up production from now on to make up for the losses, so we'll see how that helps."

Sales at top-ranked Toyota Motor Corp, which started make-up production on Thursday, fell 22.7 per cent. Nissan Motor Co's sales, excluding minivehicles, dropped 24.7 per cent.

Honda Motor Co, the slowest to recover from the supply disruptions, suffered the biggest decline, of 49 per cent.

Maruti Suffers
In India, top carmaker Maruti Suzuki posted its third consecutive drop in monthly sales as high interest rates and rising vehicle prices deterred customers. Maruti's sales fell 12.7 percent in August after a record 25 per cent drop in July.

An ongoing labour dispute at its Manesar plant also hit sales for the month, Maruti said in a statement.

Earlier this week, Maruti halted production at its plant in the northern Haryana state after it dismissed some workers and asked all others to sign a "good conduct bond." The plant, which produces about 1,200 cars a day, did not make any cars on Monday and Tuesday and made just 60 cars on Wednesday.

Maruti, 54.2 per cent owned by Japan's Suzuki Motor Corp, expects to post single-digit sales growth this fiscal year, a far cry from the 25 percent rise last year.

Total car sales in India fell almost 16 percent in July, marking the first drop in two-and-half years, as borrowing costs rose following multiple rate hikes by the central bank.

Hyundai, Kia Stretch Winning Streak
South Korea's Hyundai Motor and Kia Motors stretched their current winning streak with Hyundai's global sales climbing 5 per cent, driven by strong shipments from its overseas plants in China, India and the United States.

Affiliate Kia saw its global sales jump 27 per cent, although domestic sales slipped.

Analysts said however, the Koreans may struggle to maintain the momentum in the face of an uncertain global economy and rising price competition from Japanese rivals.

Toyota last week unveiled its all-new Camry in the United States, aiming to recover lost momentum with price cuts and a high-powered ad campaign for America's best-selling car.

"The market expected solid sales for Hyundai and Kia for August. What's important are their sales in the coming months," said Park In-woo, an analyst at LIG Investment & Securities.

"Hyundai and Kia have comfortably increased market shares and profits, but competition will be tougher next year with new model launches (by Japanese rivals)," he said.

Analysts are watching for U.S. sales data due later on Thursday to gauge their resistance to rising competition.