Maruti Suzuki India (MSIL) Chairman RC Bhargava said on Thursday that he cannot predict a turnaround in demand for automobiles even as sales for the carmaker are expected to improve month on month in October. "I will need a crystal ball to predict a turnaround in sales but unfortunately I don’t have one. There’s hope that it’ll happen in the next few months," Bhargava said. On the back of very high promotional offer, MSIL said sales numbers in the ongoing festive month will be similar to last October.
"That does not mean we are out of the woods just because monthly sales improved," said Bhargava, adding that car production is a major part of manufacturing in India and a major job creator. "The auto industry is a reflection of the economic health of the country. The economic situation in the country will go down further if car production falls anymore," the chairman said.
The country’s automotive industry is going through a prolonged slowdown as multiple factors continue to keep buyers away from making purchases. In September alone, the passenger vehicle sales fell by 23.69 per cent to 223,317 units as against 292,660 units in the same period last year.
Due to this slowdown, MSIL posted 39.35 per cent year-on-year (YoY) decline in net profit at Rs 1,358.60 crore for the quarter ended September 2019. Net sales of the company fell 22.50 per cent YoY to Rs 16,120.40 crore in Q2FY20, while sales volume fell 30.2 per cent YoY to 338,317 units during the quarter under review. The fall in numbers was attributed to the rising costs of buying a new car and weak sales in the low-cost model category sold by India’s largest automaker.
Bhargava said that an increase in road taxes and registration charges have further dampened the sentiment of small car buyers. The company’s entry level segment and compact segment has seen the maximum decline in sales in recent months.
No electric model this year
Even as rival Hyundai has launched its electric vehicle Kona in India earlier this year, Maruti Suzuki on Thursday said it will not commercially launch an electric car which it has been testing next year. The company, which had earlier announced plans to launch an electric car based on the WagonR by 2020, said that the vehicle will be at a stage which can go to the next stage of trials and testing by next year. The carmaker also feels that there is lack of infrastructure and government support to manufacture electricity powered four-wheelers