TOKYO - Suzuki Motor Corp. beat market expectations with its highest quarterly profits in two years as sales zoomed in Asia, but stuck to its cautious guidance citing a softer euro and stiffer competition in India, Reuters reported.

Suzuki, in which Volkswagen took a 19.9 percent stake this year, weathered the financial crisis better than most thanks to a product line-up heavy on cheaper, small cars such as the Swift hatchback, and to its dominance in the fast-growing Indian market.

Suzuki's India unit, Maruti Suzuki India, sells about half of India's new cars, but will face more competition over the next year from Nissan Motor, Toyota Motor and other major brands aiming for a bigger piece of the market with low-cost cars tailored to local tastes.

"We're facing a tougher race in India, and that situation is going to continue," Senior Managing Officer Toshihiro Suzuki, son of Chairman Osamu Suzuki, told a news conference.

He said the company would continue to pour investments into improving its sales and distribution network in India to stay ahead.

Analysts will also be looking at how well car sales in India hold up in the near term. In a move that could dent demand, the central bank last week raised interest rates more forcefully than expected, to fight double-digit inflation. Economists expect a more aggressive tightening for the rest of the fiscal year, according to a Reuters poll.

Suzuki reported an operating profit of 31.95 billion yen ($369 million) for the April-June quarter, up from 6.86 billion yen a year earlier and beating the average 24.5 billion yen estimated by five analysts surveyed by Reuters.