Speaking to members of the Press at the year-end press briefing, the top management of Maruti-Suzuki Limited, the nation’s largest carmaker said that there was nothing fundamentally wrong with the Indian car market which has seen tepid demand over the past few months. “We studied the data and it showed that during the last two election cycles as well, sales declined during a pre-election year and grew dramatically during an election year. I do not know why that happens, but that is what the data says”, Maruti-Suzuki Chairman, RC Bhargava told members of the media.
However while Bhargava expected sales to pick up in 2019 as they always do in election year he admitted that there were several challenges facing the industry, no least of which was the impending implementation of Bharat Stage 6 (BS6)emission norms from April 1, 2020. “The cost of implementing BS6 on a diesel car will be at least Rs 2.5 lakh, which will likely make small diesel cars unaffordable. This in addition to the new insurance norms and safety norms will impact car prices negatively. Maruti-Suzuki intends to phase out manufacturing of most BS4 cars by December 31, 2019 as the Supreme Court has clearly said that registration of BS4 cars will not be allowed from April 1, 2020 onwards. We might continue production of a few BS4 models depending on customer demand but most of our manufacturing will switch.”
In addition, Bhargava came out batting for more widespread use of Compressed Natural Gas (CNG) vehicles instead of simply promoting electric vehicles. “I understand that we want to move to electrification but the fact is that the infrastructure required for charging electric cars in India does not exist. Most people in India do not park their cars at home or a defined parking area. On the other hand Maruti-Suzuki saw sales of factory-fitted CNG cars climb 50 per cent this year. Unfortunately there have been major bottlenecks in adding additional CNG pumps in Delhi and other cities, even though we know it is a cleaner fuel and one that the public has embraced.”
Bhargava also argued that car owners should not be the only ones paying a levy to promote electric vehicle use, “two-thirds of the petrol consumed in India is done by two-wheelers, why not promote electric two-wheelers by putting a levy on petrol two-wheelers?” He continued saying that electric cars are on the whole still highly expensive in India and levies on small petrol cars bought by entry-level car buyers will help subsidize big electric cars bought by the rich, akin to the earlier perverse cross-subsidy on diesel that encouraged the sale of large diesel-powered luxury cars.
With sales expected to to get a boost in 2019, RS Kalsi, Executive Director, marketing, Maruti-Suzuki said that the crisis that overtook the non-banking financial companies (NBFC) has not impacted car sales that badly, “We work with the larger NBFC’s like Mahindra Finance and Sundaram Finance and credit offtake by consumers remains solid. Yes, NBFC’s in the real-estate and infrastructure sector were badly impacted but sales were not hit due to this but much more due to sentiment.” Maruti-Suzuki also expects sales to pick up with some major new products lined up for launch in the next few months such as the latest iteration of the WagonR, alongside volumes rising for the recently introduced second-generation Ertiga.