Auto Slowdown: Maruti Suzuki’s Bhargava Confident Of Shifting Gears In August
Maruti Suzuki India Ltd. is confident that its tepid car sales will reverse in August, attributing the current slowdown to a higher base and cyclical factors.
“It (fall in sales) isn't a big worry at all as we're going ahead with our expansion plans and investments,” RC Bhargava, company chairman, told BloombergQuint in an interview. “Most people aren't taking into account the effect of the higher base of extraordinary sales clocked in last April and May (last year) while making a year-on-year comparison.”
Sales of the country’s largest carmaker fell the most in seven years in May. The company sold 1.34 lakh units last month, a fall of 22 percent over last year, it said in a stock exchange filing. The decline was led by fall in sales of its mini segment—comprising Alto and WagonR models—that dropped 56.7 percent to 16,394 units.
Bhargava said the slowdown was a “usual” pre-election year cyclical phenomenon that even occurred ahead of the 2009 and 2014 general elections. “The downturn has happened in every industry,” he said. “Sure, it has been slow but it's not even been a year yet.”
He also downplayed rural distress and lower incomes affecting the trend of two-wheeler owners switching to lower-model cars. A "thinner" distribution and service network, Bhargava said, may have affected rural demand than stagnant wages.
I don’t think there’s any evidence says that the rural contradictions have changed for the worst anytime. The rural growth is still substantially higher than the urban areas and I expect the trend to continue.RC Bhargava, Chairman, Maruti Suzuki India
The company said a petrol variant of its utility vehicle Brezza will be rolled out next year and demand for its Ertiga was higher than expected. “Actually a waiting list has been topped for Ertiga and we're almost doubling our capacity for the model.”