Analysts are more pessimistic, expecting a meagre 3-4% growth, matching the worst seen at Maruti in recent years in 2008-09, when sales inched up 3.5%.
We will tell our shareholders that it would not be possible to grow in double digits this fiscal. We will see single-digit growth instead. I would be reasonably satisfied if we (Maruti) grow at 6-7% this fiscal, company chairman RC Bhargava told FE.
Carmakers, he said, would not be able to meet the growth forecast of 10-12% set by the Society of Indian Automobile Manufacturers (Siam), since macro-economic indicators were under pressure. The expected boost from festive sales, he said, would not be enough to meet Siam's expectations. India's auto industry had clocked a growth of 30% last fiscal.
However, analysts find Bhargava's projections a bit too optimistic. Surjit Arora, auto analyst with brokerage Prabhudas Lilladher, said the market expects Maruti sales to grow only 3-4% this fiscal, with industry growth pegged at 6-7%. There are a few challenges for Maruti: yen is appreciating strongly while people are moving towards diesel cars. Only about 25% of cars Maruti sells is diesel, he said.
Competition is getting stiffer for Maruti. It will be a challenge for the company to maintain market share, Abdul Majeed, leader of automotive practice at PricewaterhouseCoopers said.
Cars sales have been flat since the fiscal began. A total of 5.98 lakh cars were sold in April-July, just 1.12% more than 5.92 lakh in the same period last year. During the period, Maruti saw its sales dip 2% to 3.78 lakh units.
For Maruti, macro-troubles have been only part of the problem. Due to the 13-day labour action at Maruti's new plant at Haryana's Manesar which makes Swift, DZire, Ritz and A Star over 12,000 units could not be built, leading to a loss of Rs 420 crore. On Monday, the company was again forced to shut its plant after a face-off with workers, since they were not meeting the target of making 1,200 units a day.