Maruti Suzuki India Limited (MSIL), India’s largest passenger vehicle maker, believes that the car sales of the Indian auto industry will increase by around 7 to 10 per cent in the current fiscal. If it happens, this growth will be more than two fold compared to the figures of Financial Year 2011-12. However it will still remain less than the 30 per cent sales rise shown by the industry in 2010-11.
During 2011-2012, car sales in Indian automobile sector contracted due to the hike in fuel prices and rise in interests on auto loans. On 4th April, 2012 Shashank Srivastava, Chief General Manager (Marketing), MSIL, commented that the market conditions will remain difficult till June 2012 for auto manufacturers.
He further added, "I don't see the fundamentals changing at this point of time. The interest rates continue to be high. Fuel prices are actually high and rising. So I don't see a significant change in the basic fundamentals and I think the first half of this fiscal year is going to be tough for the industry." However, auto analysts speculate that the festive season after September as well as reduced interest rates will help the car sales again gain pace.
In FY 2011-12, the overall sales of MSIL reduced by 11 per cent, as compared to the sales of 11,33,695 units in the previous fiscal. The main reason behind the slump in sales is said to be the shift in customers' focus from petrol cars to diesel ones as well as the loss of production of Swift hatchback due to labour issues at its Manesar manufacturing unit. However, labour issues at the plant being resolved and the introduction of a new Swift hatchback and compact Swift DZire in the market, the sales of company have been on track in the last three months of the fiscal.
In addition, the diesel variants of Ritz, Swift and DZire also raised the sales of MSIL, mainly because the petrol prices were consistently rose last year. Reports state that the tempo of hike in petrol prices will continue this year too and will, thus, reduce the sales of petrol engine cars.
Presently, the company is engaged in increasing the production capacity of its diesel engine and, thus, signed a deal with Fiat India to source diesel engines in January 2012. Maruti Suzuki also declared strategies to increase the capacity of its diesel engine production at Gurgaon manufacturing unit in March 2012.
The company is all set to introduce its first compact Multi Purpose Vehicle (MPV) Ertiga in the Indian auto industry by the end of this month. Srivastava believes that with the launch of this car in the market, the company will record a boost in sales in fiscal year 2012-13.
On the other hand, MSIL also increased the prices of its vehicles from April 2012, like other auto makers. This was done in order to transfer the added cost it bears due to the hike in excise duty under the regulations of Union Budget to the customers. Further, Srivastava commented that the pricing scenario will remain in line with commodity fluctuation. He added that the cost of raw material is responsible for 77 to 80 per cent of the total costs incurred by the company.
