MUMBAI: Amidst rising concerns of a major slowdown in the automobile sector that has forced companies and dealer showrooms to give big discounts, the country’s largest carmaker Maruti Suzuki India Ltd (MSIL) said on Tuesday that its retail sales this festive season (between the end of Shraadh and Diwali) is likely to have grown by 14% to nearly 3 lakh units.
“The festive season has been pretty good. We are expecting 14% growth in retail sales. This will bring down inventory level at dealer showrooms by the end of this month,” said Maruti Suzuki Chairman RC Bhargava while acknowledging that demand for cars, especially those that are priced below Rs 10 lakh, has slowed down due to lack of affordability.
Bhargava said that MSIL’s wholesale numbers are lower than retail sales as they have been reducing their production level to bring down inventory levels at deal showrooms. He is confident that the inventory level will come down to less than 30 days by the end of this month.
Bhargava's statement comes despite reports that claim that the inventory level has now stretched to nearly 80 days. Dealer association body FADA had last month stated that inventory levels of passenger vehicles (PVs) have reached alarming levels, with stock days then stretching to 70-75 days and inventory totalling 7.8 lakh vehicles, valued at Rs 77,800 crore.
According to reports, Bhargava also said the decline in sales of cars priced under 10 lakh is a major concern. He added that unless the lower end of the market grows, there are going to be no feeders to the upper end of the market. "During 2018-19, as much as 80% of the car sales in India were in the under-Rs 10 lakh category, and that market is not growing at the moment,” said Bhargava. On hefty discounts currently being offered to consumers, he said that since the industry has created large inventories, they will have to give more discounts to clear that.
Partho Banerjee, senior executive officer, Marketing and Sales at MSIL highlighted that the urban market is under pressure and fell by 2% during the September quarter while the rural demand is going strong and clocked a growth of 8%.
Going forward, Maruti Suzuki expects its volumes to grow in the range of 3-4% in FY 2024-25. This is broadly in line with the PV industry’s growth forecast.
MSIL reports a 17% drop in PAT
MSIL, which has a market share of about 42% in the domestic market, on Tuesday reported a 17% drop in its standalone net profit for the September quarter, at Rs 3,069 crore, compared to Rs 3,716.5 crore reported in the same period last year.
MSIL said that PAT fell due to a provision of Rs 837 crore resulting from the withdrawal of indexation benefit and change in the tax rate on long-term capital gains on debt mutual funds as per the Finance Act 2024.
The company sold a total of 541,550 vehicles during the quarter, of which the domestic market volume was 463,834 vehicles and the export volume was 77,716 vehicles. While the domestic volume declined by 3.9%, the export volume grew by 12.1% compared to the same period of the previous year.
During the quarter, the Company registered Net Sales of Rs 35,589 crore against Rs 35,535 crore in the same period of the previous year.