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Amid Slowdown, Maruti Suzuki Remains 'Cautiously Optimistic' About Upcoming Sales

Image for Representation (Reuters)

Image for Representation (Reuters)

Maruti Suzuki India posted growth in domestic passenger vehicle sales for the month of October, the first time in seven months.

The country's largest carmaker Maruti Suzuki India (MSI) remains 'cautiously optimistic' over sales prospect going ahead as many of the challenges that led to a slowdown in the auto industry still exist, a senior company official has said. The company, which posted growth in domestic passenger vehicle sales after seven months in October, said it would take at least few more months to get clarity if the industry is finally on a revival path. "We are cautiously optimistic. The reason why we are cautious is that we do not have a crystal ball. Many of the factors like the high cost of acquisition, confusion related to BS-IV and BS-VI, issues related to finance norms and liquidity etc, continue to be there," MSI Executive Director (Marketing & Sales) Shashank Srivastava told PTI. He was replying to a query whether October sales were an indication of the revival of the industry which has been grappling with demand slowdown for almost a year now.

"We are optimistic a little bit because the stock levels are manageable as the dealers' money is freed up due to good retail. We need to look at the situation for a couple of months before we conclude the real direction of the industry," Srivastava said. The company's inventory level is now down to 30 days which is a positive factor, he added. MSI made most of the festive season and posted a growth of 4.5 per cent in its domestic wholesales at 1,44,277 units in October as against 1,38,100 units in the same period last year. Other carmakers like Hyundai, Mahindra & Mahindra and Toyota also managed to perform better over last month. Tata Motors and Honda Cars India also improved sales in October from preceding months. Passenger vehicle wholesales in India declined for the eleventh consecutive month in September.

The slump in sales has forced various companies to cut production and manpower. Elaborating on the factors impacting sales, Srivastava said high acquisition cost remained a challenge. "Cost of cars going up due to mandatory emission and safety norms, increase in road tax of up to 7 per cent across nine states and upfront payment of three years third party insurance have all increased the on-road price of a car," he noted. Besides, liquidity crunch has made it difficult for the dealers and customers to get financing for inventory as well as purchase, he added. Further, confusion in the mind of the customers regarding the transition of vehicles from BS-IV to BS-VI technology, availability of BS-VI fuel and lack of clarity whether a BS-VI compliant vehicle can run on BS-IV fuel have also impacted sales, Srivastava said.