The second half of this year could be as good as it was last year: RC Bhargava, chairman, Maruti Suzuki

By: and |
October 5, 2020 6:50 AM

If you look at what happens in the states, the time it takes to get approvals and clearances before you can run the operations, a lot of it still costs money.

I don’t have the exact numbers, but what is apparent is the sales of compact and entry-level cars have grown faster than the overall sales.I don’t have the exact numbers, but what is apparent is the sales of compact and entry-level cars have grown faster than the overall sales.

The auto sector has had a rough time but Maruti Suzuki chairman RC Bhargava believes the festive season could be a reasonably good one. Bhargava tells Sunil Jain and Shobhana Subramanian the share of first-time buyers is going up. Edited excerpts:

September wholesale despatches have been strong…

Monthly wholesale numbers are not a good indicator of what is happening. September was good on a low base. Also, at the end of August the inventory dipped below 80,000, which is 50,000 less than it should be. Our norm is that dealers need to have one month’s stock; if there aren’t enough cars in the showroom, the buyer will go elsewhere. The numbers look good but that does not mean we are in a happy situation. The September retails are not high.

How are you reading the demand in the festive season and beyond?

At the moment, we have good prospects till December because the Navratras will start in mid-October, which is a good period, and then we have Diwali. In December, most companies offer discounts to clear models, and the month often sees some of the highest sales because customers get good deals. After that, however, we have no visibility. Since Q1 was a washout and Q2 was spent adjusting to the new operating protocol, we won’t get to last year’s figures. However, provided January to March is reasonably good, H2FY21 will be as good as H2 last year.

Is the share of first-time buyers to total buyers going up?

I don’t have the exact numbers, but what is apparent is the sales of compact and entry-level cars have grown faster than the overall sales.

Given Maruti’s share of cars priced less than Rs 10 lakh is about 60% compared with the market level of 50%, are average realisations getting hit?

It is true we have a high share of compact and smaller cars but that is also helping compensate for the loss from the absence of diesel vehicles. Despite not having diesel models, we have 50% of the market. But yes, the average selling price would be impacted.

From cutting corporate tax rates to more flexible labour policies, the government has made a lot of changes to attract investment. Do you see more foreign firms coming to India, especially those looking to exit China?

Certain specific schemes, such as those for making cellphones, look like they will have an impact. But whether in general companies moving out of China will come to India in big numbers – and not go to Vietnam, Cambodia or Indonesia – is an open question. I am not sure we have done enough to attract these companies to India. The attitude of the bureaucracy and the political system towards manufacturing is not friendly enough. The bureaucracy has been shy of supporting the private sector and acting as a facilitator. The Prime Minister may be industry-friendly, but the same can’t be said of the bureaucracy, especially at the level of the states. And several moves like the agriculture Bills which will boost rural demand are facing tough opposition.

Where is the problem?

If you look at what happens in the states, the time it takes to get approvals and clearances before you can run the operations, a lot of it still costs money. It is not as though it is being done without consideration. I don’t think corruption has gone away at the field level, not at all. Look at our input policies…the system is weighted against the industry which pays much higher prices in order to subsidise others.

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