Maruti sees sales growth halving to 15% this fiscal

Maruti Suzuki India expects sales growth to halve to 12-15% as it sees rising loan rates and steep fuel prices dampening consumer confidence this fiscal.

The country’s largest car maker reported a robust 25% volumes growth in 2010-11 at 1.27 million units. “I don’t think sales would continue to grow at 27-28%. We expect it to be at around 12-15% along with the industry,” chairman R C Bhargava told news agencies on Monday. Maruti has been facing declining enquiries as well as footfalls across showrooms since February this year but its dispatches continue to show robust growth. Dispatches measure cars which are moved to dealerships from factories. Till now, the slowdown has been felt only in retail sales, which are sales from showrooms to consumers.

According to Aditya Makharia and Bharat Iyer of JP Morgan, car makers offered higher discounts in March. So there were higher cash discounts and promotional schemes such as free LCD TVs, holiday packages, etc. Makharia and Iyer cited dealers saying that Maruti Suzuki offered up to Rs40,000 discount on select models, while Hyundai offered up to Rs45,000 and Honda up to Rs55,000 last month.

“We will wait to see whether this trend extends into April,” the duo said.

Meanwhile, Bhargava said Maruti also expects to begin operations at the second manufacturing plant in Manesar in Haryana by September, six months ahead of schedule. “Our engineers are trying to expedite commercialisation of the plant. At least some part of the project should begin operations by September if not all,” he said.

Maruti Suzuki is building two new plants at Manesar where it already operates one facility.

The two new plants would add about 500,000 units a year capacity to Maruti Suzuki’s existing 1.2 million units per annum. Asked if the company was contemplating another price hike after January, Bhargava said commodity prices are “reasonably stable” at the moment.

Meanwhile, Maruti is trying every trick in the book to generate sales. It has just wound up a rather interesting promotion to boost sales.

It tied up with McDonald’s where for a meal for Rs250 one could end up getting the ‘Eeco’ free.

Though only one car is on offer, Maruti is building a database of prospective customers who participate in this contest. This could lead to sales in future.