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India's Maruti Suzuki Says Car Sales Growth Cooling

(Adds Chairman comments, details)

By Aditi Shah

MUMBAI, Oct 30 (Reuters) - India's biggest carmaker Maruti Suzuki India Ltd said growth in car sales would slow in the second half of the year, dampening expectations of a rapid recovery in the country's automotive market.

Maruti, which sells almost one in every two cars in India, beat analyst estimates with a near 29 percent rise in its quarterly net profit on Thursday, thanks to a 15 percent jump in car sales during the six months to Sept. 30.

But R.C. Bhargava, Maruti's chairman, said sales momentum was now slowing, and growth over the 2014-2015 financial year would average out at about 10 percent.

"The situation of course is not as bright as many people hoped it would be at this point. We do not expect that the growth in sales of Maruti will be as high a percentage in the first half and this will slow down," he told reporters following the release of the company's results.

Indian car makers are launching new and upgraded models of their cars, betting on improved consumer sentiment and an economic recovery under Prime Minister Narendra Modi's new government.

Passenger car sales in India, expected to be the third-largest market by 2018, are forecast to rise between 5 and 10 percent this fiscal year, after two years of declining sales.

To fend off competition from rivals such as Honda Motor Co and Hyundai Motor Co, Maruti plans to launch new and upgraded models of its cars over the next 12 months, including in the premium segment where it has had little success in the past.

This will include an SUV in the first quarter of 2016, Bhargava said.

Maruti Suzuki, controlled by Japan's Suzuki Motor Corp , said its net profit for the July-September quarter was 8.63 billion rupees ($140.37 million) compared with 6.70 billion rupees a year earlier.

Analysts expected the company to report a net income of 8.28 billion rupees, according to Thomson Reuters I/B/E/S.

Net sales of the company, famous for its low-cost, entry-level compact cars, rose 17.5 percent to 119.96 billion rupees in the July-September quarter, the company said.

Bhargava said Maruti's board had decided to recommend an increase in the foreign institutional investor holding limit in the company to 40 percent, broadly the level of public shareholding in the stock, in a response to shareholder complaints that the limit was an unnatural restriction on their freedom to buy and sell shares.

(Writing by Tommy Wilkes; Editing by Anupama Dwivedi)