NEW DELHI: Even as Maruti Suzuki India (MSIL) registered sales recovery in July, the company is not entirely sure of a recovery.
Kenichi Ayukawa, MD and CEO of MSIL said that it is too early to judge whether demand is only pent up or really starting to recover.
"After lifting of the lockdown, fortunately, we recognise that some demand is starting to recover. However, the biggest challenge is to ramp up production of vehicles, amidst the shortage of manpower and the local lockdowns being observed in different states or cities affecting the supply of components and delivery of vehicles at dealerships. It is too early to judge whether demand is only pent up or really starting to recover," Ayukawa said in the annual report of the company.
MSIL'S domestic passenger vehicle sales grew by 1.3 per cent year on year to 97,768 units in July 2020 after sales nosedived in the first quarter of FY 21 because of COVID-19 induced lockdown.
Ayukawa also hinted that Maruti Suzuki may come up with a diesel engine in future. MSIL has completely stopped selling diesel engine powered vehicles since April 1, 2020 as the company feels the increased cost may not remain an economically attractive choice for customers. "We also note that prices of both diesel and petrol fuel have now come much closer. However, if for some reason, the demand of diesel vehicles continues, the Company may have the flexibility to bring back diesel technology (1.5 litre) in its products," Ayukawa said.
RC Bhargava, Chairman of MSIL said that woes of the auto sector were compounded by the COVID-19 pandemic even before the financial year ended. He added that MSIL's sales in the rural areas are growing faster than in the urban areas.
On future forecast, he said, "We are hoping that in the second half of 2020-21, sales may near the performance of last year and 2021-22 should be better, especially if the Central and State governments recognise the importance of supporting faster growth of the car industry as a means of reviving the economy and creating larger employment opportunities."
On the diesel and petrol debate, Bhargava said that the pricing policy for diesel and petrol seems to have changed.
"The gap between the two fuels has become very small and in several states diesel is costlier than petrol. Your company presently has no diesel products in the BS-VI range. The percentage of diesel cars sold by the competition has fallen quite sharply. The market, at present, seems to favour smaller hatchbacks and petrol and CNG cars. Fortunately, we are well placed for such products," Bhargava said.
Bhargava also informed that the plan to shift the Gurugram facility had to be delayed because of the COVID-19 pandemic.
The company had wanted to shift its operations from Gurugram because of traffic congestion and expansion constraints. It was in talk with Haryana government and other state governments for additional allocation of land.