Current fiscal to be tough for Maruti, says Bhargava

By: | Published: December 7, 2018 3:04 AM

Giving another reason for the muted growth, Bhargava said that in the year before general elections, sales go down while in the year of elections, sales go up.

Giving another reason for the muted growth, Bhargava said that in the year before general elections, sales go down while in the year of elections, sales go up.

Maruti Suzuki, which has been registering a double digit volume growth for the last four fiscal years may find it challenging to achieve the same in the current fiscal, chairman RC Bhargava told a business news channel on Thursday.

“We have had four years of more than 10% growth till last year. That was because of new models which became blockbusters. We have also found that every year, around the time of festival season, newly introduced models lead to this spurt in sales. This year, we have not had any new model launch which in itself has had an impact because the difference between 10% growth and 3% growth is 14,000-15,000 vehicles and that amount come from new sales,” Bhargava told the channel.

Following the statement, the shares of Maruti Suzuki closed at `7,209.70 on the Bombay Stock Exchange (BSE), falling 4.63% over Wednesday’s close. In the last six months, the stock has fallen 18.7%.
For July to September quarter, Maruti Suzuki witnessed a degrowth of 1.5% year-on-year at 2,97,407 units while the entire passenger vehicle industry degrew at 4% year-on-year due to multiple reasons including delayed festive season, increase in fuel prices and mandatory third party insurance regulation. Moreover, while Maruti Suzuki recorded a marginal growth of 0.6% year-on-year for October, it witnessed a negative growth of 0.3% year-on-year in November, despite October-November being the festival months.

Giving another reason for the muted growth, Bhargava said that in the year before general elections, sales go down while in the year of elections, sales go up.

With the ongoing subdued demand in the industry, Maruti Suzuki has introduced higher than usual year-end discounts for models like Vitara Brezza, Dzire and Ignis to attract customers.
Commenting on the growth guidance for FY20, Bhargava said, “I am not able to determine what is going to impact sales next year. Whether customers will come in a rush to buy BS-IV vehicles before BS-VI comes in to avoid the price rise or whether they will wait for BS-VI vehicles to come in because they don’t want to buy BS-IV vehicles. The customer behaviour on this is still not determined”.

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