Maruti Suzuki cuts sales growth forecast to 8% for FY193 min read . Updated: 19 Dec 2018, 06:44 PM IST
Maruti Suzuki will stop production of majority of its BS-IV models by December 2019
New Delhi: The country’s largest carmaker, Maruti Suzuki India (MSI), on Wednesday reduced its sales forecast for the ongoing fiscal to 8% from an earlier projection of double-digit growth. The company cited low demand in the second half of the year due to high interest rates, increased insurance cost and fuel prices for its downward revision, besides its lack of new model launch in the volume segment.
Citing historical instances of sales being lower in a pre-election year and picking up substantially again in the election year, the company said it was hopeful of better sales in the next fiscal.
Interacting with reporters here, MSI chairman R C Bhargava also said in preparation for transition to BS-VI emission norms, MSI will stop production of majority of its BS-IV models by December 2019.
“In the last five months after the first quarter, sales have been flat for Maruti, while the industry saw negative growth. The question therefore is what happens next."
Bhargava said the company was offering attractive packages to customers to push retail sales in December to reduce dealer inventory, which coupled with a new model launch planned in January-March 2019, would help MSI reverse the trend of declining sales. “In the wholesales, we expect sales to go up by 5% in January-March quarter."
In the first half of the current fiscal, the company had posted sales growth of 10.5%, whereas it was flat in the third quarter.
“So, we are looking at a growth of around 8% for the ongoing fiscal," he said. Earlier this year, the company had said it was looking at a double-digit sales growth in the current fiscal.
MSI senior executive director (sales and marketing) R.S. Kalsi said external factors such as higher interest rates, fuel prices and increase in insurance cost at the time of vehicle purchase had affected consumer sentiment, thereby impacting demand. “Internally, we also had to cut down production of the old version of our best-selling MPV Ertiga ahead of the launch of a new version," Kalsi added.
Giving a historical perspective of passenger vehicle sales in a pre-election year, Bhargava said: "We did an analysis of the past numbers and the conclusion was that in the last two pre-election years sales always fell."
“In election years, sales always go up substantially. So we have to see next year," Bhargava said. MSI’s sales growth was also partly affected this year due to the absence of a new model launch in the volume segment.
“In the January-March period of next year we will have a new model, which will again push volumes for us," he said. The newly launched Ertiga would also contribute substantially since it had been received well in the market, he added.
According to Kalsi, Ertiga received bookings of 23,000. It currently has a waiting period of eight weeks.
Commenting on the company’s plans for transition to BS-VI, Bhargava said:"Our plan is for all new models to be introduced in the next fiscal to be BS-VI. The production of majority of existing BS-IV models will come to a stop by December 2019." BS-IV vehicles will be produced only on demand from customers from December 2019, he added.
The Supreme Court had ordered that sales of all BS-IV vehicles will stop from March 31, 2020 and from April 1, 2020, only BS-VI vehicles would be sold across the country due to increased pollution issues.
When asked about Maruti Suzuki’s plans to shift its mother plant at Gurugram, Bhargava said it was still in talks with the Haryana government for an alternate location. “As of now there is no progress on that front," he said. MSI CEO and Managing Director Kenichi Ayukawa said the company was considering an alternate location only within Haryana and not in other states, considering the presence of its supplier base in the state.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.