Auto India, Car India

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India’s leading car maker Maruti Suzuki Company reported its huge quarterly net gain, huge as compared to the industry estimates, greatly hit due to the labour unrest at its main plants and increasing interest rates in the third biggest economy of Asia. Two things have greatly affected on the earnings of Maruti such as a slowdown in the Indian economy and increasing competition, even if the resolution of labour unrest, which began in the month of June was a positive according to analysts.

Every second, Maruti produced new passenger vehicles and sold in the month of September in India accounted for just 40% of sales according to the information that got from the company.

“The economic slowdown does not augur well for the automobile sector as such and demand is unlikely to rebound any time soon,” said Jagannadham Thunuguntla, head of research at SMC Global Securities. “Maruti will take quite some time to recover lost market share because the rivals have become very aggressive and are looking to tap the opportunity,” he said.’

Maruti, 54.2% owned by Suzuki motor Corp of Japan said it had set on the labour unrest last week at its plant available in North India, which just began in the month of June, and had crippled the production and diluted the sales.  According to the R.C Bhargava, Maruti Chairman the unrest led to the production loss of almost 83,000 cars, a deficit similar to nearly $500 million. Maruti Company has greatly hit by the labour unrest at a time when the sector was fighting a great refuse in its demand because of the growing interest rates, increasing vehicle costs, increasing fuel costs.

There was fall down in the month of July in car sales in India. They continued to slip in the month of both August and September after a 30% jump previous business year. Auto industry body of India this month slashed its growth forecast to almost 2 to 4 % for this financial year, which ends in the month of March 2012, down from 12 to 14% expected formerly.  Since last year, there is great increase in the interest rates of The Reserve Bank for thirteen times in an attempt to battle obstinately high price rises, a move, which has hurt credit-based buyers and slowed down economic growth. Cal sales are greatly driven by a growing middle class, who mainly depends on bank loans for buying a car and almost 3 quarters of new cars are funded by many different banks as well as financial institutions.

According to Bhargava, Maruti was in advanced talks with Fiat, Italian automaker for sourcing diesel engines and even anticipated the deal to get closed within only 2 months. The approval of buying of land was given by the board of Maruti in the western Gujarat state for having the goal of expanding manufacturing facilities. It has been told by the Bhargava to Reuters that the company would make the investment of almost $1.3 billion last month for establishing a new plant likely in Gujarat. The main goal of establishing this plant is to help to boost exports because of its closeness to a port.