Sustained growth for the automotive industry will only happen with entry-level vehicles getting back on track, said RC Bhargava, Chairman, Maruti Suzuki India. He made this observation during the company's half yearly press conference in New Delhi on October 27.
Maruti has seen a massive drop in entry-level vehicle sales this fiscal but Bhargava maintained that while SUVs were ruling the roost now, it was only because of the existing customer base. “Given the demographics of the Indian market, the entry-level vehicle has to come back,” he said.
According to him, real growth in the segment would happen when customers from the two-wheeler space or first-time buyers entered the market. The only vehicles that would attract them were entry-level offerings.
Bhargava said high costs had hit growth of compact cars but things would look up in two years from now. Prices would stay steady till then and new trends in styling and design would fuel growth.
He reiterated that it would be impossible to price an SUV under INR 5 lakh bracket even while Shashank Srivastava, Senior Executive Officer, Marketing & Sales, added that these new entry-level vehicles were being offered with an SUV body shape.
Higher levels of affluence, continued Bhargava, would also help the entry-level segment grow and Maruti was ready to be at the forefront of their revival.
Growth And Challenges
The company has otherwise seen a huge growth in SUVs segment with multiple launches. This helped it register a growth of almost 10 % in PVs with 873,107 units sold between April and September. It also saw its best ever quarter with sales of 482,731 units in the July-September period
Maruti crossed the one million production mark for the first half of the year and is targeting two million units for this fiscal with 90% sold in the domestic market. The company reported a standalone net profit of INR 3,716.5 crore in the second quarter of FY24. Its net profit jumped by 80.28% as compared to INR 2,061.5 crore in the same quarter last year.
Bhargava said while the industry was expected to grow at 5.5%, Maruti would be looking at 10%. In exports, the company saw a marginal dip from 132,632 units in the first half of last fiscal to 132,542 units this year. However, it is hopeful that growth will happen from next year.
Bhargava added that the global partnership between Suzuki and Toyota was driving exports. Maruti vehicles were also more globally competitive thanks to better technology.
The cars are shipped out to currently exports to nearly 100 countries including Africa, Latin America, Asia, and the Middle East. Hisashi Takeuchi, Managing Director & CEO, said that while exports to Africa had grown significantly, Latin America looked promising.
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