India's top car maker Maruti Suzuki saw third quarter net profit slip 18 percent as currency volatility, higher royalty payouts and rising input costs weighed on margins, amid growing concerns over a demand slowdown this year. Auto sales in India grew a record 31 percent in 2010, driven by a burgeoning middle class in Asia's third largest economy, but tough competition, rising interest rates and higher fuel prices are expected to impact demand this year.
Indian auto sales are expected to moderate in 2011, with growth pegged at 12 to 15 percent by analysts. "Going forward there will certainly be some downward pressure on margins given the intensity of cost inflation over the past one year and also due to tough competition," Ajay Seth, chief financial officer said in an earnings conference call.
"We expect demand momentum to continue... But long-term concerns in terms of liquidity, availability of credit, cost of credit and fuel prices remain," he said. The New Delhi-based firm reported net profit of 5.65 billion rupees ($123.5 million) for its fiscal third quarter ended December 31, down from 6.88 billion rupees a year earlier. Sales climbed 26 percent to 92.77 billion rupees.