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  1. Demonetisation: Maruti Suzuki bookings fell 20% after note ban in Nov, jump 7% in Dec

Demonetisation: Maruti Suzuki bookings fell 20% after note ban in Nov, jump 7% in Dec

However, Maruti sales in December saw an increase of 6-7% while rural sales registered 18% increase

By: | New Delhi | Published: December 24, 2016 6:25 AM

As an immediate impact of the demonetisation, vehicle bookings in November fell by almost 20% but the same in December have increased by 6-7% for Maruti Suzuki, R C Bhargava, chairman, Maruti Suzuki India said on Friday.

In an interactive session, Bhargava indicated that there was uncertainty and some adverse impact after the announcement to delegitimise R500 and R1,000 notes was made but after a month the situation has improved as availability of cash has increased substantially. As a consequence of the move, sales of used cars from Maruti True Value also saw a decline since 60% of the transactions in True Value are not financed due to high interest rates on the pre-owned cars.

“The overall negative impact of demonetisation on the market has minimised. For Maruti there is nothing to worry but I won’t be able to give any forecast on the future before having a look at the January data,” added Bhargava.

Rural sales for Maruti decreased by 11% y-o-y but in December it is up by almost 18%. In the urban pockets 80% of the vehicles are financed while the same in the rural areas are in the range of 50%-60%.

With respect to the decrease in volumes in the entry segment car, especially Alto, the octogenarian attributed the fall in volumes to the lack of capacity constraint in the manufacturing capacities and it was a deliberate strategy to reduce the production of some cars to make way to Baleno and Vitara Brezza. Pertaining to the threat the automobile manufacturers face from rising popularity of shared mobility platforms, Bhargava opined that Ola and Uber are valued customers of Maruti and these platforms use the vehicles more efficiently which will lead to faster replacement of the vehicles.

Maruti’s Gujarat plant is scheduled to start operations from February and in the last quarter of the current fiscal the company expects to get almost 10,000 cars (Baleno) from the new manufacturing capacity which will be run by Suzuki.

In the new research and development centre in Rohtak, Maruti has invested R1,700 crore till date and will further invest up to R3,800 crore in 2019.

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