Maruti to continue with rural drive despite weak rain forecast
According to the Indian Meteorological Department, India is likely to witness a 'below normal' monsoon in 2015, for the second consecutive year.
New Delhi: Country's largest carmaker Maruti Suzuki today said it will continue with its rural expansion plans despite a prediction of below par monsoon this year.
It said however that weak monsoons have always remained a concern for the overall economy as well as the company.
"Our programme of extending sales in these (rural) areas, by building more outlets continues. It is certainly not impacted by a report about the monsoon having the probability of being below par. We don't change our plans on these reports," Maruti Suzuki chairman RC Bhargava told reporters on the sidelines of Hero Mindmine Summit in New delhi.
According to the Indian Meteorological Department (IMD), India is likely to witness a "below normal" monsoon in 2015, for the second consecutive year.
Betting big on India's rural market, Maruti is targeting to increase its penetration in rural areas by over 20 percent to have presence in 1.5 lakh villages.
The company's rural sales had increased by 23 percent to 4,15,380 units in last fiscal, when it posted its highest ever total sales in a financial year. It had posted total sales of 12,92,415 units in 2014-15, beating previous best in 2010-11.
In 2014-15 the company had established presence in 1.25 lakh villages. In 2013-14, the company was present in 93,400 villages across the country.
When asked if below normal monsoon prediction is a cause of worry for the company, Bhargava said: "The impact of weather on economy is very much there. It is not only a concern for me as far as Maruti's sales are concerned. It is a concern for me as an Indian. If the monsoon is bad the impact it has on the economy is bad for all of us".
He, however, added that there is no reason at the moment to alter car sale projections for the current fiscal.
"SIAM (Society of Indian Automobile Manufacturers) has projected a growth of about 5-6 percent in the current fiscal and at the moment there is no reason to make a change in that forecast," Bhargava said.
When asked if there would be a change by company in its production plan for diesel vehicles following the National Green Tribunal banning more than 10 year old diesel vehicles in Delhi, Bhargava said: "I don't think ban has anything to do with anybody's production as long as the customer continues to
buy the cars."
"But clearly I think there is a need to look at the technology. It needs to be upgraded for diesel cars and this upgradation is also dependent on right kind of fuel being available. The oil companies today are not able to provide low sulphur diesel," he added.
On technology upgradation, Bhargava said: "We are selling all our cars conforming to all the rules prescribed by the government. We are selling cars all over India with Euro 4 technology and there is nothing we can do as we can't go to Euro 5 technology till the required fuel is available," Bhargava said.
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According to data from Society of Indian Automobile Manufacturers, Maruti Suzuki's entry-level car Alto topped the list, selling 22,237 units in August.
Maruti Suzuki’s chairman RC Bhargava stated that the automaker may be forced to discontinue making small cars if costs become unviable because of the central government’s policies. The policy he was talking about is the one where all passenger cars need to have six air bags.