Maruti Suzuki is witnessing robust sales on the back of new product launches even as a good monsoon promises to bolster sales in coming months. Speaking to Bloomberg TV India , Chairman RC Bhargava exuded confidence of clocking double-digit growth in the current financial year. The company still faces the dilemma of matching demand and supply for some of its best-selling cars, he said. Excerpts:
FY17 started on a decent note and you have expectations of a better year. With the monsoon looking good, how is Maruti Suzuki gearing up for this financial year? Are you confident of a double-digit growth in FY17?
Yes. We remain confident of posting a double-digit growth. In the first two months, we grew in double digits. We had that unfortunate incident of a fire at Subros (a key vendor that supplies air-conditioning systems). That brought us down in June. But I think, we will make up as we go along. And all indications are that the markets will hold up and we will get our double-digit growth.
Are you confident of a really good bump up in sales this festive season?
The policy always is we start piling up inventory before the monsoon season. This year, the demand itself has been so high that we have waiting lists for at least two of our car models. So, how much of an inventory will we be able to pile up for these two models? That is a big question. So in that sense, the festive season may not see us being able to supply much more cars than otherwise.
Is it a good that the demand is more than the supply?
It is both good and not so good. It is good in the sense that you like to have a lot of customers. It is not good in the sense that we don’t like to keep customers waiting. The ideal situation is that customers can get a car within a few days.
How do you see this problem getting addressed in the long run?
The problem is: how to anticipate the volume of demand for each vehicle. When you plan a model, and are ordering the components, and vendors are creating capacities, you have to give some indication of the volume. If we underestimate the volumes, we will have a problem.
So did you underestimate the volume?
Yes, we underestimated the demand. Not deliberately. But that was our best estimate — what our marketing personnel, dealers and everybody else estimated. We said that Baleno, for example, will sell about 10,000 a month. It turned out to be much higher than that. The other problem is to overestimate the demand. The tendency is to keep a little margin of safety so that the supply wouldn’t get into serious trouble.
Do you think rural consumption and growth will pick up?
All indications based on past experiences suggest that a good monsoon leads to a pick-up in rural demand for all kinds of products. It won’t happen in anticipation of a good monsoon. So if people think demand will pick up suddenly in July-September, I don’t think so. I think there is a little bit of a gestation period. And if this monsoon turns out to be as good as it has been predicted, October-December onwards demand in rural areas will be much better than last year.