India's Maruti blames strike for sales fall

Leading Indian car maker Maruti Suzuki Friday reported its first drop in monthly sales for more than two-and-a-half years, blaming the fall on a strike at one of its factories that hit production. The New Delhi-based firm, which is majority owned by Japan's Suzuki Motor Corp, said it sold 80,298 units in June, down 8.8 percent from a year earlier. The company said in a statement to the Bombay Stock Exchange that sales also fell due to a planned, six-day maintenance shutdown of its Manesar and Gurgaon factories in northern Haryana state. Maruti last showed a drop in sales in December 2008, analysts said. "Production in the company’s Manesar plant in northern state of Haryana was impacted due to a strike by a section of employees," the stock market statement said. Maruti shares fell 2.4 percent on the news to 1,130.1 rupees in intraday trading on the Bombay Stock Exchange. production of cars stopped for 11 days last month as 2,000 workers at the Manesar plant downed tools to demand the recognition of a new union. The walkout cost Maruti nearly $93 million and hit the production of about 12,600 cars, mainly its high-end, mid-sized D'zire and SX4 models. In the first days of the strike, Maruti said it had an "ample inventory" to absorb the halt in production and that the delivery and sales of cars were unlikely to be affected. Maruti chairman R.C. Bhargava later said delivery of diesel cars produced at Manesar would be delayed, alongside some models meant for exports. The pace of growth for Maruti's car sales has been slowing for three successive months, data shows. Car sales in India -- seen as a bellwether of economic health -- are starting to moderate after breakneck growth for nearly two years, as auto loans get costlier and input and fuel costs rise. Maruti's small car models, including the popular M-800, Alto and A-Star, as well as the SX4 and D'zire plus the multi-utility-vehicle segment all showed lower year-on-year sales in June. India, where just one in 10 households in urban areas owns a car and one in 50 in rural areas, is the world's fastest-growing auto market.