India's top carmaker eyes post-poll bounce as profits dive

Top Indian carmaker Maruti Suzuki Friday reported a 35.5-percent drop in quarterly net profit, but said it hoped for a turnaround in the auto market once a new government takes office next month. Maruti, controlled by Japan's Suzuki Motor Corp, has been reeling from a downturn in India's once-booming car market as an economy growing at under five percent for a second straight year deters customers. Maruti reported profit for the quarter to March slid to 8.0 billion rupees ($132 million) from 12.4 billion rupees in the year-earlier period, on sales which tumbled 9.5 percent to 118 billion rupees. "We are hoping post- the election of the new government, there will be an improvement in sentiment and the car market will revive," Maruti chairman R.C. Bhargava told reporters. Voting in India's marathon general election winds up on May 12 with results due four days later. The opposition Hindu nationalist Bharatiya Janata Party is tipped to form the next government under Narendra Modi, chief minister of the prosperous western state of Gujarat, who is running on a platform of economic recovery. Analysts agreed political stability after several years of scandal-fuelled crises and policy uncertainty could be key to reviving car-buying sentiment. "If you get a stable government at the centre, it could do a lot to boost sentiment," Deepesh Rathore, director of New Delhi-based Emerging Markets Automotive Advisors, told AFP. But he added any recovery would not be dramatic, forecasting overall growth for the year would be broadly flat. India's car sales have fallen for two years in a row after posting double-digit growth in earlier years. Maruti said lower sales, higher promotional expenses and a dealers' compensation package had "impacted the company's bottom line" during the fourth financial quarter. The earnings undershot market consensus forecasts of a 9.5-billion-rupee profit. But Maruti added the year-earlier number was swelled by a one-off gain, making the decline seem larger. Maruti, which sold four out of every ten new cars in India in the last financial year, saw its shares slide by over three percent before they pared losses to end down 1.3 percent at 1,955 rupees. The car company said forecasts of a below-average monsoon this year could undermine hopes for economic recovery for India, where over half of all farmers depend on rain for irrigation. India's tough economic times are testing the nerves of global giants such as General Motors, Ford and Volkswagen which have spent billions of dollars on new plants in India to tap into the under-penetrated market. They are betting the nation's vast population, rapidly urbanising middle class and low car ownership will turn it into the world's biggest car market after China and the United States by 2020, as forecast by many analysts. "The customers are coming into the showroom wanting to buy, maybe not today but that day will come," said senior Maruti sales executive Mayank Pareek.