New Delhi, July 24: Maruti Suzuki India, the country’s largest car maker, sold 10% more cars in the domestic market in the June quarter despite the overall car market remaining flat.
The company attributes its success to customer’s preference for higher-end models and diesel cars despite lower average discounts, and improved sales in rural markets.
Sales of diesel cars have increased by a 66% year on year even when the discount per car fell to an average Rs 9,500 from about Rs 12,000 in the March quarter this year. Rural sales have improved and account for 12% of overall sales against just 9% in the whole of last fiscal.
But the company remains cautious in giving an outlook for 2009-10.
Senior officials maintain a “month by month” approach and have distanced themselves from the 5% growth target set out at the beginning of this fiscal.
“The top 10 cities are still not responding, the next 10 cities have seen some growth and so on…… Then, while our new models are growing, the older cars are not showing growth, which means growth (in car sales) is still sporadic, uneven and limited to some geographies, models and players. Which is why we have brought in flexibility into the system and are doing a month-to-month assessment instead of sticking to the earlier growth forecast,” Maruti officials said.
They said that, in the event of a demand spurt, the company was capable of producing 1.1-1.2 million vehicles at its current production facilities without needing to expand capacities. Though the total capex spend this fiscal stands at Rs 2,100 crore, it is largely on account of new model launches and R&D and involves no actual capacity expansion.
On the export front, Maruti appears to have made rapid gains with A-Star. The scrappage incentives provided by some countries have only helped matters. Officials said the full-year export target remains at 130,000 units while adding that 90% of June-quarter exports comprise the A-Star. Export growth during the quarter under review was a 135% though the company has admitted that domestic profitability remains higher.
While denying any immediate link between weak monsoons and car sales in rural areas, officials also pointed towards the possibility of interest rates hardening in the coming months to suggest that sales could get affected in that scenario.
Net up 25%
Maruti Suzuki’s net profit in the June quarter rose to Rs 584 crore from Rs 466 crore a year earlier
Profit was helped by an easing of raw material prices and favourable foreign exchange movements.
New models and tapping new customer segments helped it raise market share
–Agencies