Maruti Suzuki sees positive demand trends for this festive season
As the festive season continues, Maruti Suzuki remains poised to meet the evolving demands and preferences of Indian consumers. With a track record of excellence and a dedication to customer-centricity, the company is well-positioned to maintain its positive sales momentum and build on its legacy as a leader in the Indian automotive industry.
In a recent interview with CNBC-TV18, Shashank Srivastava, the Senior Executive Officer of Marketing & Sales at Maruti Suzuki, shared some promising insights about the company's performance during the festive season. According to Srivastava, the demand trends have been highly positive this festive season, reflecting a remarkable upswing in retail sales.
One of the standout highlights of Maruti Suzuki's recent performance was the impressive 24 percent uptick in retail sales during the Onam season. Onam, a significant festival in the southern state of Kerala, witnessed a surge in consumer interest and demand for Maruti Suzuki vehicles.
Below is the verbatim transcript of the interview.
Q: First if we can just set the tone with some indication of how the demand trends are panning out this festive season?
A: The demand trends are actually quite positive. So as the festive season begins in India from August 17 in Kerala that's the Chingam month there, the Onam was on August 29 and there we saw an uptick of almost 24 percent in retail. That is a really positive beginning that sets out some sort of an indication for the other months of the festive season. So right now we have the Ganesh Chaturthi, Janmashtami festival going on and we have seen an uptick of almost 8 percent there. So overall things look positive, September, again 5 percent up in inquiries, retail is up 36 percent and therefore looks like quite positive season this year as well.
Q: So you said there is an uptick of 8 percent in retail sales in Ganesh Chaturthi and Janmashtami so far, and you saw 24 percent uptick in retail sales during the Onam season. So what does this mean for overall monthly sales, because in August, you outperformed the industry with the wholesales going up about 15 percent? You are sitting on a base of around 1.9 lakh units. Is that a sustainable trend in September and October?
A: Volumes, I can't comment individually on Maruti Suzuki. But I think industry volume should be roughly similar to what you saw in August, that's around 360,000. Last year, of course, September was the peak month, highest ever in the history of Indian auto industry. That was 355,000. So we can expect a very large volume this month as well. I think this should be the highest ever monthly sale in the Indian auto industry in September, on a wholesale basis. But on the growth front, you will still find just about 1.5 to 1.7 percent growth because of the high base. So absolute volume will be great. But in terms of growth, maybe it will be a little tempered down.
Q: So you are saying expect the highest ever monthly sales in September in the Indian auto industry. This is particularly for Maruti right, the overall wholesale sales is what you are talking about?
A: Overall industry I am saying.
Q: Can you break it down for us and what's happening with the small car segment? Because year to date, if you look at it, the mini and the compact car segment has seen a fall of almost 9 percent, is there any recovery in that pocket at all?
A: At the moment, by I haven't seen that recovery so the indicators still are that the small car segment would be roughly 30-31 percent of the overall industry. Last year it was 34 percent. Our projections for this full financial year is also that it should be roughly around that 30-31 percent. So it is under a little bit of stress. On the other hand, SUVs, obviously are doing very well and they are now almost 47 percent of the overall market.
Q: So you are saying there is no recovery yet in the small car segment, which is the mini and compact car segment. And there's still a lot of stress there. But in terms of numbers, I think 4.12 lakh units is how much you sold year-to-date. So by the end of the year, what would the fall be? If you look at just the minicar segment, it's been in excess of 30 percent the fall year-to-date. So what are we looking at by the end of the year in this space and when do you come through?
A: So part of that decline that you just mentioned, obviously, is because on the base side, we had the Alto 800, which is no longer there. Alto 800 used to sell about 10,000-11,000 vehicles a month and that has suddenly disappeared. So some of the figure might be misleading the negatives. And obviously, later on the base of Alto 800 will not be present, especially the second half of last year it wasn't there. So you would see in terms of the volumes going down in percentage terms may actually not be as high as what you saw in first half of the year.
Q: This year Maruti has gained market share, despite the kind of stress that we have seen in the lower end of the market so that is commendable. So I am guessing as and when the lower end picks up, the market share will improve further. But can you give us the numbers right now? What is the SUV market share as of September end, and are you on track to meet that 25 percent target that you had laid out by the end of FY24?
A: Yes, we look like we are on track. In fact, we were the number one SUV makers in July, and in August as well. In August on the cumulative basis also, we became number one. We were number four last year so our one of the clear objectives, which we had stated at the beginning of the year was to be number one SUV makers in the country. And we have become in a short time, in fact, in July, and now August as well and hopefully in September also.
So we are on track of for that our market share in August was around 23.6 percent in the SUV space. So we are also on track to achieve that objective of 25 percent which looked really heavy, but then some of our new SUVs have done really well, the Vitara, the Fronx, Jimny - they have done quite well. And therefore, with the increased production levels also, I think we are very well on track to meet our objectives in the SUV space.
Q: So you are on track to meet that 25 percent SUV market share target by the end of FY24. You are already at 23.6 percent as of the month of August. The Society of Indian Automobile Manufacturers (SIAM) had projected that the passenger vehicle industry will grow 5 to 7 percent in FY24. But given the kind of improvement in trends that you are seeing, do you think that the industry could outperform SIAM’s projections? And what are your own targets?
A: So actually, I was part of the SIAM panel, which predicted 5 to 7 percent growth at the beginning of the year. We had looked at all parameters and said that it would be around the 4.1 million mark will be the industry sale overall against the 3.89 million that we saw last year. I think the first half of the results so far show that we are on track for that. I don't expect growths to be exceeding these numbers because the base effect will kick in from this month.
In fact, despite all the pluses that we have just spoken about by the end of September, that is first half of this financial year, I would expect industry growth to be around the 6.7-6.8 percent mark already. Going forward to keep maintaining a growth on high base will be tough, but I think we will stick by the original projection of 5 to 7 percent growth.
Q: Electric vehicles (EVs) are the flavour and the whole industry is sort of booming with new launches in the EV space. I understand that you have your target on track by FY25 you plan to launch the EV. But what's the update over there? Earlier you had also said that by FY31, you expect to have six EV models that would contribute 15 to 20 percent to your total sales, are you on track to doing that?
A: Yes, absolutely, our projection is that the industry will be 17 percent EVs by 2030. And in our power trains 15 percent will be EVs. We will be having six EVs in different sectors, first of which we will be launching in the mid SUV space next year. And preparations are on because it requires building up of an ecosystem. So it's a little different from what other manufacturers have been doing, just launching vehicles. But we are looking at the entire ecosystem including how not to inconvenience our consumers as far as charging infrastructure is concerned or also because we expect a lot of queries being a new technology regarding the EV so we are preparing to the entire ecosystem, not just a vehicle to be launched.
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