The Indian automotive industry is on-track for a record year, and the country’s largest carmaker Maruti Suzuki India too is confident of recording history with cumulative production of 2 million units this fiscal.
But at the same time, despite record sales of passenger vehicles, the industry is pegged to see a slowdown in the coming fiscal. The passenger vehicle segment is expected to grow by around just 5 percent, and Maruti Suzuki India is upbeat of outperforming the industry by way of expanding its position.
R C Bhargava, Chairman, Maruti Suzuki India believes that “Without the growth of entry-level segment, having sustained growth for car market is highly unlikely. The Industry expects 5.5% growth this year, Maruti Suzuki India will grow about 10%, compared to 16.4 lakh vehicles sold last year, this year we will sell around 18 lakh units.”
He acknowledges that Maruti Suzuki India will still not achieve 50 percent market share this fiscal, but the company continues to be on track with its future plans including setting up of “new facility for which the site will be finalised by March 2024. The first electric vehicle will also rollout in FY2025.”
Demand for small cars
The slowdown in sales in small car or entry-level car segments has been due to a variety of factors such as prices of vehicles going up due to various policies and cost of raw materials going up. These have made the entry-level small cars affordability going out of the reach of many customers.
“I believe with the kind of demographics and consumers we have in India there are around 15-18 million two-wheeler users, which means the demand for entry-level cars has to come back. If the prices of entry-level cars does not go up significantly and there is improvement in income level (on the back of economic growth) in the next 2-3 years, people will be able to afford small cars and the market will gradually come back,” says Bhargava.
When queried about the company’s plans to make entry-level cars more affordable, Bhargava states that “Maruti Suzuki has always tried to reduce cost, have been most frugal manufacturer in India or most parts of the world. You will not find the kind of focus as much as us to reduce cost of the vehicle.”
He said that the possibility of reduction in GST for small cars does not look possible, but the improving income levels will bring back customers.
In fact, while most automakers have either exited the entry-level segment, Maruti Suzuki India could be the only player at present to offer vehicles in the mass-market hatchback segment.
The Maruti Suzuki Alto 800, which was one of the most affordable passenger cars was also discontinued.
Bhargava says the reduction or discontinuation of certain models didn’t happen because “we wanted to, but because the market fell. If the demand comes back we will increase production of the vehicles. We were always dominant in the segment; we are still in position to large numbers of these vehicles.”
