Maruti Suzuki does not expect huge numbers next fiscal as fuel price hike, high inflation and high interest rate continue to plague the sector and said it will have to cut production if the downslide in car sales continue.
“The industry has not been going through very happy times. The sector has been witnessing negative growth and adjustment of production in line with market demand is quite natural,” said Maruti Suzuki Chairman RC Bhargava in an informal chat with mediapersons on Friday.
“Shutdown of production line will depend on how market behaves,” Bhargava added when asked whether the company will further adjust production if downslide continues.
Maruti Suzuki had recently undertaken one day closure at its Gurgaon and Manesar plants.
The company’s petrol car sales have been continuously falling. While it fell 12 per cent in December, it fell 15 per cent in January and 21 per cent in February.
“For the company, negative growth was predominant in December, January and February with February reporting a negative growth as high as 16 per cent,” Bhargava said.
When asked about the sales prospect next year, he said: “We expect sales to grow 5-7 per cent in the next fiscal and diesel car sales will play a major part in that. The company is hopeful that diesel car sales will grow from 4,00,000 units to 4,65,000 units in the next fiscal.”
Maruti’s diesel car production has been growing- in December it grew by 54 per cent, in January 60 per cent and in February 22 per cent. Maruti Suzuki sold 1.05 million vehicles until Feb. 28 this fiscal year, up 4.3 per cent from a year earlier.
He said the slowdown in the economy is affecting demand of cars and not much has changed in the past few months that would help in spurring growth.
“I have not seen anything different happening which will increase growth...Car sales can only increase when people have more income, people must have the money to run the car. That can happen only when there is economic growth,” he added.
Talking about challenges being faced by the company, outgoing Managing Director and CEO Shinzo Nakanishi said Maruti will face a challenge in increasing or maintaining its market share unless it has substantial presence in the segment.
“The SUVs and multi-purpose vehicles segment has been growing very fast in India but we are not growing there. We need to have a stronger presence there. Having just the Ertiga is not enough,” said Nakanishi
“While the company has been focussing on small cars, which it its strength, the competition has been tough and the challenge for MSI is to have a bigger presence in the SUV/MPVs segment in order to increase or maintain its market share,” added.
“We have to bring some more models there,” he said.