Discounts drive up Maruti Suzuki’s December retail sales to all-time high

NEW DELHI: India’s largest carmaker, Maruti Suzuki Ltd, pumped up discounts last month, boosting December retail sales to its highest ever and considerably trimming its inventory.

Maruti’s showroom sales in December was around 220,000 units, 18.18% higher than around 180,000 units sold in the same month a year ago, according to two people aware of the development.

This is also the company’s highest ever retail monthly sales, the people cited above said on condition of anonymity. Like other carmakers in India, Maruti does not provide retail sales and counts despatches to dealerships as sales.

Maruti increased discounts as it wanted to start the new year with a lower inventory, the first of the two people said.

“Lots of customers postponed their vehicle purchases in 2018 because of the rise in petrol and diesel prices and the adverse impact of the NBFC (non-banking financial company) crisis on availability of credit and the decline in the stock market. Now, with such huge discounts being offered on every vehicle, customers realized it was the best time to buy a vehicle,” this person said on condition of anonymity. An email sent to Maruti Suzuki’s spokespersons on Friday remained unanswered.

The meltdown at Infrastructure Leasing and Financial Services Ltd towards the end of last year led to a credit crunch among NBFCS, squeezing loans for retail borrowers including car buyers.

According to the people mentioned earlier, the company offered significant discounts on all products at its Arena and Nexa chain of dealerships, aided by a slight recovery in customer sentiment in the second half of December.

Among others, Maruti offered a ₹25,000 discount on its compact SUV Vitara Brezza, one of India’s top-selling models with a waiting period of more than month, said one of the two people cited earlier. On premium products such as the new Ciaz sedan and the S– Cross crossover, discounts ranged from ₹70,000 to ₹90,000. Maruti was already offering high discounts on Swift, Dzire and Baleno, among others, despite most of these cars being bestsellers in their respective sub-segments.

The sales feat comes at a time of slump and may have helped Maruti reduce inventory, but the effect of discounts is bound to show up in the company’s realization per unit in the Octoberdecember quarter.