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

The Economic Times - - Business Of Brands - Ke­tan.Thakkar @times­group.com

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.

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