While the fallout from the U.S.-China trade dispute, uncertainties about the global auto market and rising costs to develop cleaner cars are common concerns for automakers, a slowdown of the Indian market has emerged as a new headache for some Japanese firms.

The slowing Indian economy has taken a heavy toll on Suzuki Motor Corp., which has a strong footing in the world's fourth largest auto market through its subsidiary Maruti Suzuki India Ltd.

Suzuki's group net profit in the six months to September tumbled 41.8 percent from a year earlier to 79.30 billion yen ($730 million), with sales in India dropping 26.5 percent to 675,000 units.

"It is difficult to say whether (the Indian auto market) will pick up" in the near future, Suzuki President Toshihiro Suzuki said at a press conference earlier in the month.

Car sales in India declined for 11 straight months through September, before slightly rising 0.3 percent to 285,027 units in October, according to the Society of Indian Automobile Manufacturers.

Honda Motor Co. also took a hit in India during the same period, with sales of both autos and motorcycles dropping due to a credit tightening and series of floods in southwestern India, where Japan's third largest automaker by volume has a large share of the motorcycle market.

Honda saw its six-month group net profit decline 19.0 percent from a year earlier and lowered its full-year earnings guidance. The company's motorcycle sales in India fell 18.7 percent in the period to 2.68 million units from a year earlier.


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"The Indian auto and motorcycle markets are slowing due to a tightening of consumer credit while the country's economic outlook remains unclear," Honda Executive Vice President Seiji Kuraishi told reporters.

Toshihide Kinoshita, a senior analyst at SMBC Nikko Securities Inc., said the credit crunch caused by last year's defaults of India's financial service operator Infrastructure Leasing & Financial Services dealt a heavy blow to the country's auto loan system.

He said that about 30 or 40 percent of car buyers in India rely on loans.

"It was inevitable that the Indian auto market would dent the Japanese automakers' bottom lines," Kinoshita said.

The trouble in India added to the adverse impact of foreign exchange rates as the yen turned stronger than most Japanese automakers expected for the April-September term.

Ironically, Toyota Motor Corp., which has the largest global market presence among the Japanese carmakers, reported a record profit for the six months.

Its net profit increased 2.6 percent to 1.27 trillion yen and sales grew 4.2 percent to 15.29 trillion yen thanks to new models added to its lineup, including the RAV4 sport-utility vehicle and the Corolla sedan, and continued cost reduction.

Toyota fine-tuned its group's global vehicle sales forecast to 10.70 million units from the previously estimated 10.73 million, but maintained its net profit outlook at 2.14 trillion yen, up 14.2 percent.

"Toyota's earnings result can be praised amid a slowing global auto market," said SMBC Nikko's Kinoshita, attributing the company's solid performance to its focus on maintaining market share while keeping up efforts to lower costs.

In a stark contrast, Nissan Motor Co., struggling to revive its business by shifting away from the expansionary strategy of ousted former boss Carlos Ghosn, saw net profit fall by 73.5 percent in the April-September period and lowered its profit outlook for the full year to the lowest level in 10 years.

Koichi Sugimoto, a senior analyst at Mitsubishi UFJ Morgan Stanley Securities Co., said Nissan needs to introduce new models into the market as soon as possible to compete with its rivals' lineup.

"I would like to see how Nissan's new management (from December) establishes its new strategy to recover sales especially in the U.S. and Chinese markets," he said.