BENGALURU (Reuters) – Maruti Suzuki India Ltd said on Thursday its net profit fell over 39% in the second quarter from a year earlier, amid a sluggish economy that has hit demand across sectors.

Corporate office of Maruti Suzuki India Limited is pictured in New Delhi, India, February 26, 2016. REUTERS/Anindito Mukherjee/File Photo

India’s auto sector is going through a slowdown, hurt by credit squeeze, higher insurance costs and a pile-up of inventory. This has prompted major automakers to cut production and rein in costs.

However, the maker of popular hatchbacks such as Swift and Baleno managed to beat market expectations for profit for the third consecutive quarter.

Maruti reported a net profit of 13.59 billion rupees ($191.46 million) for the September quarter, down sharply from 22.40 billion rupees in the same period a year ago.

Seventeen analysts, on average, had expected a profit of 10.76 billion rupees, according to Refinitiv data.

Late last month, the company cut prices of some of its cars, becoming one of the first major firms to respond to the government’s move to cut corporate taxes in a bid to revive economic growth.

Maruti has reported its eighth straight monthly drop in vehicle sales and in August cut the number of its temporary workers to cope with the slowdown in auto sales.

The company sold 338,317 vehicles during the September quarter, down 30.2% from a year earlier.

FY 2019-20 have to be viewed in the context of exceptionally weak demand environment, Maruti said, adding that the lower availability of finance and increased down payment requirement affected the affordability of customers to own cars.

Revenue from operations fell 24.3% to 169.85 billion rupees, the company — majority owned by Japan’s Suzuki Motor Corp — said in a filing to the exchanges.

Shares of the Mumbai-based company were down 2% in afternoon trade, compared with the broader Mumbai market which was trading 0.41% lower.

Reporting by Chandini Monnappa in Bengaluru; Editing by Subhranshu Sahu

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