India's Maruti extends discounts to lure car buyers

India's top car maker, Maruti Udyog Ltd , has extended discounts on vehicles to boost sales in the fiercely competitive market, its managing director said on Thursday, but it is squeezing margins.

Demand for cars in India has slowed down this year on the back of higher interest rates while a stronger rupee has put exports under pressure, making companies offer discounts to lure customers and retain market share.

Maruti, 54.2 per cent owned by Japan's Suzuki Motor Corp , offered discounts on several models including its best-selling Esteem sedan and Alto in August, which helped boost domestic sales by 27 percent over the same month a year earlier. Managing Director Jagdish Khattar said the discounts would be offered up to September 15.

"Our sales are good, but at what cost? I don't know how long I could keep doing this," Khattar told reporters on the sidelines of a business conference. Maruti, which has nearly half the Indian market, offered discounts up to $743 on many of its vehicles last month and ran a similar offer in June.

Khattar said Maruti, which aims to export 50,000 cars in the current fiscal year to March, was hurt by the rising rupee although the appreciating currency also cut costs of imported components.

The rupee has gained about 8 percent this year, making it Asia's best performing currency.

Reuters