Maruti bets on new launches to surpass its FY17 growth
“THE GUJARAT PLANT WILL IMPROVE PRODUCT AVAILABILITY. FY18 WILL BE AN IMPORTANT YEAR IN OUR MEDIUM-TERM GOAL OF SELLING 2 MILLION VEHICLES BY 2020” KENICHI AYUKAWA, Managing director, Maruti Suzuki India
Maruti Suzuki, the country’s largest car maker, is drawing up an aggressive strategy for another year of double-digit growth in the domestic market.
The company is set to bid the current financial year adieu with a growth rate of about 11 per cent in domestic sales, on the back of products like the Baleno and Brezza.
The car manufacturer, which commands a 47 per cent share in the domestic passenger vehicle market, has seen an easing of capacity constraint after parent Suzuki inaugurated its plant in Gujarat last month.
“Our recent models like Baleno and Brezza are doing well. The network, including Nexa, is healthy and growing. The Gujarat plant will improve product availability. FY18 will be an important year in our medium-term goal of two million vehicle sales by 2020. Like in the past four-five years, we want to do better than the market next year,” said Kenichi Ayukawa, managing director, Maruti Suzuki India.
Maruti plans to launch two models in FY18. The sustained demand for existing models and new products may help the company clock a double-digit growth next year.
At the start of FY18, the company will have pending deliveries of more than 100,000 units of the Baleno and Brezza. In addition to new launches, the company will continue to expand its sales and service network next year. The company is likely to set up 300 more outlets (Nexa and regular showrooms) in FY18. It will also ramp up its pre-owned car sales network, True Value, which supports sales of new cars through exchange of old vehicles.
The company’s improving product mix, along with rising volumes, is reflecting on its profitability. FY17 is set to be the most profitable year in the company’s history. During the April-December period, its profit surged 45 per cent to ~5,628 crore. Analysts from Nomura and ICICI among others have a ‘Buy’ call on Maruti Suzuki’s stock which hit its all-time high of ~6,230 in early February.
In a recent report, Nomura projected a compound annual growth rate (CAGR) of 13 per cent in the company’s domestic volumes in the three years ending March 31, 2018. Its domestic volume growth was 11.5 per cent in FY16 and is 11 per cent in April-Feb of FY17.
Nomura said a strong model launch pipeline, four-six months waiting for certain models, and better realisations will be strong triggers for Maruti’s growth. “We want to improve over the performance of FY17 next year,” said a company official.