The auto industry’s growth will be “flattish” in the next one year as the demand for small cars are low, and until the demand for small cars comes back into the market, the overall market is also likely to be slow, Maruti Suzuki India (MSIL) said on Friday.

“Sustained demand over a period of time in India requires the small car market to revive. I believe that it is not going to happen next year. I think it will take two or three years before the small car market begins to revive. But something has to happen in that segment because if the small car market does not revive and remains like it is today, I don’t think long-term sustained growth at even 6-7 per cent a year will be possible,” RC Bhargava, Chairman, MSIL, said.

Q2 results

MSIL on Friday reported a consolidated net profit of ₹3,764 crore in the July–September quarter, driven by better sales, softening commodity prices, cost reduction efforts, and higher non-operating income. This is the highest jump year-on-year ever in the company’s history, Bhargava said. The company recorded a net profit of ₹2,112 crore in the corresponding quarter last year.

Total income of the company also grew by 24.10 per cent y-o-y to ₹37,902 crore during the second quarter as compared with ₹30,541 units in the corresponding period last year.

Shares of MSIL closed at ₹10,552.90 a piece on the BSE on Friday, up 1.21 per cent from the previous close.

Speaking on the sidelines of the quarterly results announcement, Bhargava said that the affordability of small cars has changed drastically over the past few years for various reasons. He said while MSIL’s growth will continue, the industry overall will see a flat kind of situation.

“The highlight is the fact that we have, during this half-year, crossed the one million mark. We had been waiting for this to happen earlier, but various factors like the semiconductor crisis, set back our goal because we hoped to get two million much earlier. But now that we have crossed one million in the first half, the probability of crossing two million during this year is very high,” he said.

Positive outlook

He said the company was looking forward and hope it would reach the landmark of becoming the first company in India to get two million production in one year.

“Because the semiconductor crisis is not affecting us any more now, we have been able to reduce our waiting list from being close to 4 lakh cars to, by the end of October, being somewhere around 2.15 lakh cars, almost half of what it used to be,” Bhargava added.

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