Maruti Gears Up for Another Year of Double-digit Growth
Country’s largest carmaker plans for a 9% rise in output, 10-11% sales growth
Mumbai: Maruti Suzuki has firmed up plans to post yet another year of double-digit growth, with forecast of a good monsoon, upcoming salary increase to government employees as well as softening fuel prices and interest rates boosting its expectations.
The strong outlook from the manufacturer of one in every two new cars sold in India will be a confidence booster for the country’s automobiles market. Just a few days ago, industry body Siam cut its forecast on FY17 auto sales growth to 6-8% from the previous estimate of 11-12%, blaming policy uncertainties, especially over diesel vehicles, that it said created a challenging market environment. Last fiscal, double-digit growth at Maruti helped the overall passenger vehicle market expand 7%. Excluding Maruti’s numbers, the market growth was just 2-3%.
Maruti is budgeting for a total output of 1.55 million to 1.57 million units, with it planning for a 9% increase in production and about10-11% growth in domestic sales in the fiscal year that began this month, several vendors who have been informed of the company’s plans told ET.
Typically, carmakers share year-ahead production plans with parts suppliers so that they can keep pace with the production schedule.
In FY16, its total sales, including exports, rose 10.6% from the previous year to nearly 1.43 million vehicles. Sales in the lo- cal market increased 11.5% to a record1.3 million units. The previous year, too, it posted doubledigit expansion in sales.A Maruti spokesperson refused to comment on the forecast, saying: “As a policy, we do not give any forward looking guidance.”
Maruti currently has an optimum installed capacity of 1.5 million units. To meet the new target, which exceeds this, it is likely to generate additional volumes through capacity enhancement at the existing plants. It is also factoring in fresh volumes coming out of the Gujarat factory, being set up by Japane- se parent Suzuki Motor and which is expected to go on stream in January next year. The company posted its decade-high market share in cars at 52.7% in FY16. Its share of 46.7% in the overall passenger vehicle was the highest in 7-8 years.
If Maruti achieves its target of 10-11% growth, the company will close the just started fiscal year with volumes of 1.43-1.44 million units in domestic sales, breaking the sales record for the third straight year. The company’s confidence stems from outstanding bookings of more than 55,000 for the premium hatchback Baleno and about 40,000 for the newly launched compact SUV Vitara Brezza.