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BW Businessworld

Maruti Reports First Monthly Sales Rise

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Japanese car sales turned sharply higher in January, buoyed by the government's efforts to help its struggling auto industry, while sales in South Korea shrank on a slowing economy and a lull during the Lunar New Year holiday.

Japanese automakers are set to get a much-needed boost this year from Tokyo's extension beyond the March deadline of tax incentives to buy fuel-efficient cars and new subsidies that took effect on December 20 to scrap older vehicles.

New automobile sales in Japan, the world's third-largest market, rose 36 per cent to 415,931, industry data showed on Wednesday. Excluding 660cc minivehicles, sales surged 41 per cent to 263,267 vehicles, marking the biggest rise on record for the month of January, albeit from a historically low base.

"The tax incentives and subsidies helped a lot," said Michiro Saito, an official at the Japan Automobile Dealers Association. "New model launches and environmentally friendly cars like Toyota's Aqua and Prius and Honda's Fit are doing particularly well."

Tokyo's incentives especially favour hybrids, pure electric cars and other vehicles that employ advanced technology such as clean diesel engines, benefiting hybrid leaders Toyota Motor Corp and Honda Motor Co.

Toyota said on Wednesday its new hybrid Aqua compact received 120,000 orders in the first month of sales, equivalent to 10 times the monthly sales target. The Aqua, called Prius C overseas, is the world's cheapest and most fuel-efficient hybrid to date, starting at 1.69 million yen with listed mileage of 35.4 km/litre in Japan.

Toyota's domestic sales in January grew 46 per cent. Nissan Motor Co saw a 36 per cent rise, excluding minivehicles, while Honda's soared 59 per cent, with hybrids now accounting for about half of the brand's non-mini domestic sales.

Japanese automakers are bracing for a bumper year globally in 2012 after supply disruptions caused by the March 11 earthquake and tsunami dragged them down last year.

The industry has forecast a 19 per cent rise in new vehicle sales in 2012, also on demand from tsunami-hit areas where thousands of cars were destroyed. It hopes the government's initiative will boost sales by about 900,000 vehicles in the business year from April.

Still, car sales are on a longer-term downtrend in Japan, where the population is shrinking, urbanisation is rising, and city-dwellers mainly rely on public transportation.

India Inches Ahead
In India, top carmaker Maruti Suzuki India Ltd reported its first monthly sales rise since May 2011, driven mainly by export growth as it completed its recovery from production-crippling strikes last summer.

Maruti said sales rose 5.2 per cent in January, with exports soaring 54.3 per cent. Domestic sales inched up 0.6 per cent as demand slows down in Asia's third-largest economy due to high interest rates and rising fuel costs.

Maruti, 54.2 per cent owned by Japan's Suzuki Motor Corp, had said it expected its factories to be back at full capacity by January after losing $500 million worth of production last summer due to labour unrest.

Car sales in India are seen growing just 0-2 per cent in the financial year that ends in March, an industry body said this month, but will likely rebound later in 2012 with an easing of interest rates.

Sales Skid In Korea
In contrast, all five South Korean car makers except Ssangyong Motor posted double-digit falls in domestic sales last month, citing the Lunar New Year holiday, which fell in February last year.

Car sales are expected to dip this year due to South Korea's slowing economy and competition could heat up as its free trade deal with the United States takes effect early this year.

Hyundai Motor Co's domestic sales fell 18.5 per cent, while brisk overseas sales helped eke out a 3.5 per cent rise globally.

"Fewer working days is the biggest reason for the sales drops in January," said Lee Sang-hyun, an analyst at NH Investment & Securities.

"Hyundai's sales from its plants in India, the United States and Czech Republic rose by double-digit percentages, whereas China factory sales fell because of Lunar New Year holidays," he said.

Sister company Kia Motors Corp's monthly sales fell for the first time in nearly three years, dragged down by a 15.5 per cent drop in sales at home.

"The sales outlook of Kia is not bright this year as domestic sales are seen declining 1.1 per cent, global auto market growth is seen slowing and overseas rivals are stepping up competition," Kia said in a statement.

Hyundai and Kia last month reported smaller-than-expected quarterly profits and said they expect growth in their global sales volume this year to halve to 5.7 per cent and 9.5 per cent, respectively.