Vehicles sold till December down 16.6%

Car market leader Maruti Suzuki expects that it will sell fewer cars in 2011-12 than it did in the previous year.

This is due to a combination of factors – slowdown in the economy, high inflation, high interest rates, increasing fuel prices and the production loss it suffered because of labour problems at the Manesar plant.

In 2010-11, the company sold 1.27 million vehicles.

“We cannot reach that figure (last year's) in 2011-12,” said Mr Shinzo Nakanishi, Managing Director and CEO, Maruti Suzuki India Ltd.

In the nine months of this financial year, its sales are down 16.6 per cent to 773,361 vehicles compared to the same period last year. Domestic sales at 684,892 units in the nine months were down 16.5 per cent and exports at 88,469 units were down 17.6 per cent.

However, the company expects to end the fourth quarter of this financial year with higher sales than the same period last year. In December, the company's retail sales at 116,000 were the highest ever, said Mr Mayank Pareek, Managing Executive Officer – Marketing & Sales.

On the opening day of the auto expo here today, Mr Nakanishi told journalists that the slowdown in the Indian market was short-term and temporary. The company was confident that it was only a matter of time before sales perked up.

“We will launch new products, create new categories and offer multiple options to customers, while strengthening our compact car portfolio,” said Mr Nakanishi.

Answering questions, Mr Nakanishi said the company would start work on its Gujarat plant only after it achieved sales of 1.8 million units. Its present capacity was about 1.5 million units and it had started work on a third plant at Manesar, with a capacity of 2.5 lakh units a year. However, the company may push back the date for commissioning this plant because of the slowdown in sales. The company had planned to start production at this plant in early 2013.

On talks with Fiat for sourcing diesel engines, Mr Nakanishi hoped an agreement would be signed by the end of this month. Issues over pricing were being sorted out. Maruti Suzuki hoped to get 5,000-10,000 1.3-litre diesel engines from Fiat.

Simultaneously, it would also increase during the year its own diesel engine production capacity from 2.4 lakh units to three lakh. Any further investment in diesel engine production would depend on government policy. “In the absence of a clear policy we are not sure what to do,” said Mr Nakanishi.

He added that he was pushing Japan (Maruti Suzuki's parent Suzuki Motor) to develop a diesel engine, “not a bigger one, but a smaller one.” At present, Maruti Suzuki makes Fiat's 1.3-litre diesel engine.

(This article was published on January 6, 2012)
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