De-growth in small cars to stagnate the overall market next fiscal: RC Bhargava
Maruti Suzuki India Ltd on Friday said the domestic car market is likely to stagnate next financial year as the small car segment, which is crucial for growth, is unlikely to revive in the next two to three years.
“The industry is not optimistic about growth next year and the growth projections for the next year are virtually at stagnation levels. That’s partly because of the de-growth in the small car segment,” R.C.
Bhargava, chairman, Maruti Suzuki India, said in a call with reporters to discuss quarterly earnings.
Passenger vehicle sales in India have been growing at a fast clip since the last three years. In FY23, sales scaled a record high of 3.8 million vehicles and is projected to grow at 5% this fiscal.
Bhargava’s comments come in the backdrop of a 55% drop in Maruti’s mini car sales to 32,150 units in the September quarter.
This contrasted with a sharp growth in the company’s UV sales in the same period. UVs comprised 37% of Maruti’s total sales in the domestic market during the quarter.
UV sales in the three months ended September advanced 117.5% to 180,066 vehicles from a year earlier.
A greater mix of UVs drove Maruti’s revenue and net profit to record level, making it the best-ever quarter for the company. Bhargava said the current momentum witnessing India’s passenger vehicle market is unlikely to be sustained if the small car market remains depressed.
A slew of regulatory changes on emission, safety and insurance have made small cars – those priced below Rs10 lakh — unaffordable and that is unlikely to change unless the income levels grow faster than the car prices, Bhargava said.
