Tata Motors and Mahindra & Mahindra, two of India's biggest automakers, reported a wider-than-expected fall in quarterly earnings on Monday on exchange rate fluctuations and high interest rates in Asia's third largest economy. Indian automakers have been hit hard by rising costs and a series of interest rate hikes that have deterred new purchases in recent months. Car sales in September fell 24 percent, the biggest monthly fall since December 2000.
"Interest rate increases frequently in the past, fuel price escalation and overall expectation of lower industrial growth and slowdown in the economy, all these may impact commercial vehicle demand," Tata Motors Chief Financial Officer C. Ramakrishnan told reporters.
India's central bank has raised rates 13 times since March 2010, prompting squeezed firms struggling under rising debt costs and flagging sales to call for a pause in hikes. Mahindra, India's largest utility vehicle maker, said the economic outlook for the year was cautious due to the global climate, rising interest rates, volatile capital flows and exchange rates, sending its shares down as much as 7 percent. Tata Motors, India's third-largest domestic carmaker, is seen gaining from woes at market leader Maruti Suzuki, which last month reported a more than halving of its quarterly net profit on labour unrest.
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