AUTOMOBILE
Automaker expects the fourth quarter to bring back the momentum in the passenger vehicle sales, which have seen a flat growth for last 5-6 months
Country's largest carmaker Maruti Suzuki has cut its sales forecast to 8% from an earlier projection of double digit growth.
It expects the fourth quarter to bring back the momentum in the passenger vehicle sales, which have seen a flat growth for last 5-6 months.
"We recorded a good growth in the first quarter at around 10.5%, subsequent which there was a flat growth. But we expect this to return in last quarter taking overall growth for this fiscal at 8%," Maruti Suzuki India chairman R C Bhargava said.
Earlier this year, the company had said it was looking at a double-digit sales growth in the current fiscal.
After the first quarter, sales have been flat for Maruti Suzuki mainly in third quarter while the industry saw negative growth. There are historical instances of sales being lower in a pre-election year and picking up substantially again in the election year, he said.
"We have done an analysis of the past numbers and the conclusion is that sales always fell in the last two pre-election years," he said.
There was no launch of a new model, which contributed to low sales along with other factors such as high interest rates, increased insurance cost and fuel prices.
A new model from Maruti Suzuki stable will be launched in January-March quarter.
This, along with good response to Ertiga, and attractive offers to push retail sales will enable the company to register growth in sales. Ertiga has received bookings of 23,000 and currently has a waiting period of eight weeks. "In the wholesales, we expect sales to go up by 5% in the January-March quarter," Bhargava said.
The company is all prepared for transition to BS-VI emission norms and will stop production of the majority of its BS-IV models by December 2019. It plans to have all new models to be introduced in the next financial year on BS-VI. Production of the majority of the existing BS-IV models will come to a stop by December 2019.
"By April 2020, when BS-VI emission norm is implemented, the cost of a diesel vehicle is expected to be around Rs 2.5 lakh more than a petrol variant. Customers will then decide whether to go for diesel or petrol... Our production will have to be naturally adjusted with customer demand," he said.
BS-IV vehicles will be produced only on demand by customers from December 2019, or in case the company feels it can manage the time of distribution and registration of such vehicles ahead of the deadline, he said.
The Supreme Court has halted sales of all BS-IV vehicles from March 31, 2020, and allowed sale of only BS-VI vehicles from April 1, 2020.
R S Kalsi, senior executive director (sales and marketing), said external factors such as higher interest rates, fuel prices and increase in insurance cost at the time of vehicle purchase had affected consumer sentiment.
On the company's plans to shift its mother plant at Gurugram, Bhargava said it is still in talks with Haryana government for an alternate location. "As of now there is no progress on that front."
The company, though is considering an alternate location within Haryana and not in other states considering the presence of its supplier base in the state.
On electric vehicles, the chairman said an imposition of a cess on conventional vehicles to promote electric cars will not serve the purpose as only the rich would end up receiving subsidies.
Two-wheelers consume two-thirds of petrol in the country and a cess, if at all, must be on two-wheelers and not only cars. "The biggest problem in India is the large number of small cars. Around 70% of these cars could not be parked at homes and thus cannot be charged. Small car electrification can happen on the basis of subsidies. We need technology for that," Bhargava said.
Globally, including the US and Europe, electrification of cars has met with little success so far. Looking at infrastructure issue, electrification of two-wheelers will be more practical than cars. All technologies -- CNG, hybrid and biofuels are required going forward to address pollution issues, he said.
The company is looking at introducing a strong hybrid technology in its petrol cars through its global partnership with Toyota-Suzuki, that would help increase fuel efficiency by as much as 30%.
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