Maruti expects marginal sales recovery next fiscal
nNEW DELHI: Maruti Suzuki India Ltd expects to post a modest 6% increase in car production in the next fiscal year despite a lower base following a sharp fall in output this year, said two people directly aware of the development.
The growth estimate, made in an annual internal projection exercise by the country’s largest carmaker, would total a production increase of about 100,000 vehicles to 1.75 million units in 2020-21, the people said requesting anonymity. The local unit of Suzuki Motor Corp. had recorded a 13.5% drop in production during April 2019 to February at 1.46 million vehicles. In the same period, domestic wholesales, or factory dispatches, fell 15.6% to about 1.33 million units.
Maruti’s forecast shows that the company does not expect a major revival in the economy and customer sentiment next fiscal, amid uncertainties in the domestic market due to headwinds such as prevailing economic slowdown and transition to stricter Bharat Stage-vi (BS-VI) emission norms. These estimates may not have fully accounted for the impact of the Covid-19 outbreak, especially in the first quarter of next fiscal.
The forecast by Maruti is crucial as the company is considered a bellwether for India’s passenger vehicle industry with a more than 50% market share.
Mint on December 13 had reported that Maruti had decided to increase production target in the March quarter by 6%, or 60,000 units, after cutting output significantly in the first three quarters, as the company was expecting a recovery in sales due to the introduction of new models and a possible recovery in demand.
The Covid-19 outbreak in the first week of March, though, has wreaked havoc in the auto industry as customer footfalls and retail sales have nosedived.
“This is the initial estimate and the company may not have included the full impact of the coronavirus outbreak. Hence this number might further be reduced unless the economy recovers significantly in the second half of the year,” said the first person.
According to the second of the two people mentioned above, the subdued projections are also because of Maruti’s decision to stop selling diesel vehicles from April 1 with the introduction of BS-VI emission norms and greater competition in the sportutilityvehiclesegment.responding to queries emailed on Wednesday, a Maruti spokesperson said the company cannot give any guidance on future volumes.
Vehicle sales in India have been sliding over the past year due to the economic slowdown and a liquidity crunch.