Maruti sees 20% jump in sales in 3 days, but remains cautious about future

New Delhi: In the three days since the month long Onam festivities began in Kerala, Maruti Suzuki India has already seen sales jump by 20 percent. Are these green shoots for car makers or is it too early to cheer? Too early to cheer one would say.

While rural sales have been robust despite the slowdown, a good monsoon this year has raised the hopes of vehicle makers. But, several factors other than monsoon rains will come into play before there is any rise in sales.

The price of petrol has risen by almost 34 percent since May 2010 and that of diesel is up 49 percent. It has been seen that whenever fuel prices rise, there is a decline in car sales. So despite good monsoons and unprecedented discounts on popular models, people are not coming into showrooms to purchase cars.

Maruti’s production this month has been about 3,800 cars a day, which is a 1,000 cars less than the peak production of 4,800 cars.

MM Singh, Chief Operating Officer (Production) at Maruti says that though the company has not stopped production for a single day this month, production was not increased in anticipation of festive uptick, due to the many holidays.

“If the marketing guys tell us, we can ramp up production anytime. But till now, it remains at about 3800 cars a day,” he said.

Even the country’s largest car maker is playing the festival season by the ear this fiscal. Mayank Pareek, Chief Operating Officer (Sales and Marketing) said the company dispatched 75,000 vehicles to its dealerships last month, but because of inventory that was already stocked up the company sold 78,000 cars to customers. “We expect to dispatch 75,000 vehicles again this month, let’s see how retail pans out. Till now, indications in Kerala market are encourging,” Pareek said.

The next fortnight will perhaps give Maruti a better idea about sales this festival season, which will peak around Duseehra and Diwali or between October and November.

Pareek said discounts are very high right now, 20 percent up compared to last year, as car makers use various ploys to sell their vehicles.

Maruti is using an old gimmick - targeting select groups of buyers - for increasing sales and also focussing majorly on exchange schemes.

Pareek said many customers hesitate to buy a new car because they feel the exchange value of their old vehicle is not good enough and in trying times for all car companies, Maruti is being generous with exchange bonuses.

While the average discount on Maruti cars is Rs 14,600, the highest discount on any Maruti car right now is on SX4.

Meanwhile, Maruti today launched the Stingray at a starting price of Rs 4.10 lakh (ex-showroom).

The car has been launched in three variants of LXi, VXi, VXi (O), priced at Rs 4.10 lakhs, Rs 4.38 lakhs and Rs 4.67 lakhs respectively. It has a 998 cc K-series engine and the company says its fuel efficiency is 20.51 kmpl.

Between April and July this year, when the car market saw a boodbath, Maruti managed to increase market share to over 40 percent in the passenger vehicle segment. According to data from the Society of Indian Automobile Manufacturers (SIAM), Maruti sold 3,20,491 of the 7,93,708 passenger vehicles sold in the domestic market in these four months.

A year earlier, the company’s market share was 38.96 percent, with 3,34,288 of the 8,57,977 units sold.

For July alone, Maruti’s market share increase was phenomenal at more than five percentage points to 40.34 percent from 34.96 percent in July last year.

Pareek said the company will do better than its peers this fiscal and amid an overall market decline it may show moderate growth. But this growth will be at the cost of margins since it is being driven by deep discounts. he also said that there was no scope of a price increase in this market where sales were subdued.

He said SIAM’s growth forecast for the market at 5 percent will most probably be revised downward since the first four months of the fiscal have already set back car makers by over 7 percent.