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Hero Honda sees sales slowing after holidays

Posted by Yogesh on Tuesday, 21 October, 2008

NEW DELHI, Oct 21 (Reuters) – Hero Honda Motors Ltd expects to top last year’s festival season sales of 537,000 this year, but India’s top motorbike maker then expects sales to slow down as tight financing weighs.

Hero Honda, in which Japan’s Honda Motor Co  holds 26 percent, said its September quarter net profit rose by 50 percent to 3.06 billion rupees ($62.4 million) from 2.04 billion rupees.

“We expect to do sizeable number in retail. But past the festival season there has to be slackness in numbers,” Managing Director Pawan Munjal told a news conference.

He said sales were likely to slow after October as customers defered purchases to next year, expecting newer models and cheaper financing costs. India’s festival season generally runs for about a month over October/November.

Net sales rose 36 percent to 31.90 billion rupees in the September quarter from 23.52 billion a year earlier.

India’s central bank on Monday cut its key lending rate by 1 percentage point to 8 percent, the first cut in more than four years, raising hopes that easier credit and lower rates would flow through to consumers.

Meanwhile, top carmaker Maruti Suzuki on Tuesday launched a new engine plant to make “fuel-efficient” petrol engines with an investment of 12 billion rupees.

Managing director Shinzo Nakanishi said while commodity prices were still a concern and would hurt profitability, the company would not change its investment plans.

Maruti Suzuki, 54.2 percent-owned by Suzuki Motor Corp, plans to launch its A-star hatchback in India in November, a month later than its original schedule and Splash model sometime in 2009, he said. Source Reuters

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