The shares of India’s largest car manufacturer, Maruti Suzuki, ended almost 1% higher on the National Stock Exchange on Friday even though the company reported the biggest fall in its quarterly profit the day before.

The company’s consolidated net profit declined 39% in the July-September quarter because of a sales slowdown in automobile industry. The company posted a net profit of Rs 1,358.60 crore in the July-September quarter, reported The Economic Times. It had posted a net profit of Rs 2,240.4 crore in the corresponding quarter last year.

The company’s net sales declined 22.5% year-on-year to Rs 16,120.40 crore in the second quarter. The volume of sales were down 30.2% year-on-year at 3,38,317 units.

“One of the main factors is increase in the cost of acquisition of the car due to various reasons coming together like implementation of more stringent safety and emission [Bharat Stage-VI] norms, increase in vehicle insurance expenses and hike in road taxes in many states,” said the company. “Along with this, the lower availability of finance and increased down payment requirement have affected the affordability of customers to own cars.”

The Indian automobile industry in India is in the midst of a downturn that started several months back. It is one of the worst slowdowns to have disrupted the automobile industry since the collection of data of vehicles sales started in 1997. Last month, passenger vehicle sales fell for the 11th straight month, registering a 23.7% decline, said the Society of Indian Automobile Manufacturers.

In September, Maruti Suzuki sold 1.1 lakh domestic cars, a drop of 27% from the same month last year. It also decided to shut down operations at its plants in Gurugram and Manesar in Haryana on September 7 and September 9.

Other automobile manufacturers such as Ashok Leyland, which is part of the Hinduja Group, and Mahindra and Mahindra Limited are also facing difficulties. In September, Ashok Leyland announced that seven of its facilities would have up to 18 non-working days because of continued weak demand for its products. This month, it decided to close its facilities at multiple locations between two to 15 non-working days.

Following the release of vehicle sales numbers in August, Union Finance Minister Nirmala Sitharaman sparked a controversy by blaming the “millennial mindset” of relying on ride-hailing services such as Uber and Ola, instead of personal vehicles, for the crisis in the automobile industry. Congress leader Rahul Gandhi called it a foolish theory and asked the government to come up with a “concrete plan to fix the economy”.

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