Auto sales not presenting true picture, retail demand hasn’t picked up, says Maruti Suzuki chairman

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Published: April 12, 2019 12:45:29 PM

Automobile companies’ sales are not presenting the actual picture of demand for vehicles in India, which has not picked up and is likely to remain subdued till later this year, says R C Bhargava, Chairman of Maruti Suzuki India.

Wholesale figures don’t really reflect the actual demand, says R C Bhargava 

Automobile companies’ sales are not presenting the actual picture of demand for vehicles in India, which has not picked up and is likely to remain subdued till later this year, R C Bhargava, Chairman of Maruti Suzuki — the country’s largest carmaker — said this week. Wholesale figures don’t really reflect the actual demand, Bhargava said in an interview to CNBC TV18 yesterday.

“Wholesale figures which you see and happening, they don’t really reflect the actual demand,” Bhargava said, adding that “… the retail sales are the actual measure of the demand. Further, he said that the demand for vehicles is not likely to revive soon. “Personally, I don’t think they will really pick up till after elections,” Bhargava said.

Wholesale figures are the sales made by the company to the automobile dealers, whereas retail sales are the ones made by the dealers to consumers. Usually, if the retail sales don’t keep pace with wholesale sales, it leads to inventory pile up with the dealers.

“We have reduced our factory inventory input to quite a low level that is why production in March was reduced. Dealers inventory in March is about three weeks,” said Bhargava while further adding that the production figure for April will depend upon the demand.

Earlier this month, Bhargava had said that sales slow down considerably in the election year, going by the past trend. However, they usually pick up after elections. “In 2009-10, growth was almost 20% post the elections, in 2014-15, it was 12%. Whether that is going to get repeated this year or not is a big question and all of us are keeping our fingers crossed,” Bhargava had said.

India’s largest PV manufacturer with a 51% market share posted a 0.7% on-year decline in its domestic sales in March and a 6.1% rise in volumes during FY19. The company had pegged growth rate of 10% during the first quarter of FY19. It reported a 7.6% y-o-y decline in domestic volumes.

Passenger vehicle sales in the April-June quarter had registered a 20% y-o-y growth but afterwards the trend got reversed. During July-September, volumes fell by around 3% y-o-y due to Kerala floods and the base effect as in the second quarter of FY18, volumes had shot up post the rollout of GST when companies restocked. After the month of September, volumes remained sluggish as owning a car got costlier post the implementation of new insurance regulations which raised premiums by over two-fold.

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