NEW DELHI: Maruti Suzuki (MSIL) Chairman RC Bhargava said on Friday that the revival of entry-level car sales is very important for the growth of India’s passenger vehicle (PV) industry. The Chairman expressed hope that demand for smaller cars will make a comeback in the next two-three years. Bhargava signalled that without this, sustained high growth of the PV industry at 6-7% in a market like India is very unlikely. “I have been told that the industry is not very optimistic and has projected stagnant growth for the next fiscal (FY24-25). I think this is partly because of degrowth in the smaller car segment,” he said after MSIL reported robust figures for the quarter ending September 2023 (Q2FY24).
Hit by distress in the rural economy, rising prices and a shift in preference towards sports utility vehicles (SUVs), the sale of smaller cars this July-September quarter hit a low of 35,000 units versus 77,000 units in the same quarter a year back, as per Siam data. This was a big drop of 75% from the nearly 1.38 lakh small cars sold in the same quarter of 2018. Maruti faced the maximum impact of this slowdown as it dominates this segment with models such as Alto, Celerio and WagonR.
Bhargava said given the kind of consumer and demography India has, the fact that we have 150-180 million 2W users, demand for entry-level cars has to come back. This can be achieved only if the unfavourable affordability factor gets eroded and the per capita income of consumers rises from the current level, he said. He expects competition (all other carmakers combined) in FY24 to grow at 5.5% while he is hopeful Maruti will clock a growth of 10% and sell over 18 lakh units. When combined with exports, it is likely to hit the 20 lakh milestone in a single year this fiscal.
Maruti net profit up 80% at Rs 3,716.5 crore in Q2
Maruti Suzuki reported an 80% year-on-year rise in net profit at Rs 3,716.5 crore in Q2FY24 on the back of better sales, softening commodity prices, cost reduction efforts and higher non-operating income. Net sales surged 24% to Rs 35,535.1 crore. The company sold 5,52,055 vehicles during the quarter as against 5,17,395 units in Q2 of last fiscal