The country’s largest carmaker Maruti-Suzuki on Friday said that bookings and sales of their products which had dipped significantly in November were back up in December.
“Bookings were down 20 per cent in November year-on-year but December bookings are up seven per cent”, RC Bhargava, Chairman, Maruti-Suzuki said while addressing a media conference.
He also said that that November sales had suffered a double-whammy as the festive season up till Diwali fell in October this year. “You must always compare October-November sales together because Diwali falls in different months. And combined over these two months, festive season sales were up close to seven per cent.”
Bhargava also said that the carmaker was well on its way to achieve its stated target of 10 per cent sales growth this fiscal year but refused to comment on the coming three months. “We have to wait and watch”, he said, but he did back the Government’s move to demonetise high value notes. “On the whole cash availability is improving in the economy.” That said, he did admit that sales from Maruti True value, the carmaker’s used-car platform were down significantly. “This is because while 80 per cent of new car sales are financed, only 40 per cent of used car sales are. This is because interest rates on used car loans are usually 200 basis points higher than new car loans.”
However, Bhargava did mention that the continued rural demand was surprising to the carmaker. With close to a third of the carmakers sales coming from rural areas, and forming a bulk of the ‘all-cash’ sales of the carmaker, he mentioned that December demand in rural markets was up 18 per cent. “While rural sales have been very good this year, climbing 14 per cent year-to-date, we did not expect the rural economy to be so resilient even after this dramatic demonetisation growing at a faster rate this month.” But he admitted that rural sales were also positively impacted by a good monsoon and higher minimum support prices.
The carmaker said that demonetisation did have an impact particularly for vehicles that doubled up as commercial vehicles, so sales of the Eeco and Omni were down. However, Bhargava said that Maruti had been cushioned from the worst impacts of the Government move which has adversely impacted consumer goods companies and some of Maruti’s rivals primarily due to the huge sales success of the Brezza launched earlier this year and the continuing success of the Baleno. “We have sold over 85,000 Brezza’s this year”, he said proudly.
Talking of other issues, Bhargava said that the carmaker had two launches lined up for early-2017 with the IGNIS and Baleno RS expected to be launched next quarter. He gave no timeline for the launch of the third-generation Suzuki Swift and Dzire. Bhargava also praised cab aggregators Ola and Uber and said that they were among the carmaker’s biggest customers and that Maruti was training 70,000 drivers for the two operators. “They make four-wheel travel affordable for people who may not be able to afford a car daily. They have become an important market for us, cars are being used more efficiently and more often and more cars are being bought.”
While talking on environmental issues, Bhargava said that the issues have been conflated in India and that studies have proven that cars are not responsible for the PM2.5 and PM10 particulate pollution. “In Europe, cars are being attacked because of the NOX emissions they generate, however if you look at air quality data you will notice that NOX levels in cities like Delhi are below critical levels. The fact is that north India has high levels of dust pollution and instead of attacking cars, policy makers have to look at tackling these issues.”