In a clear indicator that consumer confidence is slipping, India’s largest carmaker Maruti Suzuki registered a 5 per cent drop in its May sales from the same period last fiscal. On Thursday, government data showed that gross domestic product (GDP) growth slumped to 5.3 per cent, well below expectations of 6.1 per cent. Here are 5 things the Maruti Suzuki numbers tell us.
• Fewer new buyers: The entry-level segment, or the segment that caters almost exclusively to first-time buyers – has been hit badly. Maruti is the market leader in the mini segment, with a portfolio at various price points. This segment has shrunk by almost a third in May, with sales of the Maruti-800, Alto, A-Star and WagonR, falling 29 per cent to 29895. Sales in this fiscal so far have also fallen 27 per cent.
• Petrol price hike: With petrol prices rising, sales of petrol versions are likely to be hit even more going forward. Maruti Suzuki chairman R C Bhargava has said that he expects the petrol segment to take a 50,000 unit sale hit, while diesel variants could go up to 150,000. Already, Maruti has decided to ramp up its diesel engine segment, as buyers shy away from petrol-run cars since diesel is currently about 45 per cent cheaper than petrol. That prices difference has meant that buyers are pumping for diesel-run cars despite an excise duty hike on such vehicles introduced in the Union Budget in March this year. Following the petrol price hike earlier, Maruti Suzuki has announced steep discounts on its petrol variants.
• High interest costs: With a high interest regime, credit has become tougher for retail buyers as well. With a cloud over the economy – GDP growth in the March quarter dropped to 5.3 per cent while it fell annually to 6.5 per cent –buyers, especially those looking to buy a car for the first time – are putting off such big-ticket purchases such as cars.
• Value for Money: The Swift and Dzire continue to be Maruti’ best bet. While sales of Swift, Estilo and Ritz grew 14.7 per cent in May, sales of the remodeled Dzire jumped 63.8 per cent. The company has also almost doubled output of these two models t0 31,000 this year, according to Bhargava. The jump in Dzire sales can also be attributed to the launch of a diesel variant. Meanwhile, sales of its more expensive SX4 and the luxury Kizashi fell 85 and 76 per cent, respectively.
• Ertiga: Tapping into the growing demand for utility vehicles, Maruti Suzuki in April launched the Ertiga, which has seen bookings of over 32,000 already. In April 2012, passenger car sales grew only 3.40 per cent while utility vehicles sales grew 47.32 per cent, according to data from the Society of Indian Automobile Manufacturers. May sales in this segment – comprising the Gypsy, Grand Vitara and Ertiga – grew 603.1 per cent to 7734 units. This numbers can be attributed largely to Ertiga, since Maruti now sells the Gypsy only to security forces.
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