Maruti Suzuki Sales dip 20% Post Demonetisation

Maruti Suzuki, country’s largest carmaker, said that its retail sales fell by 20 per cent in the October-November time span, as compared to the same period last year, as cash crunch following scrapping of 500 & 1000 notes led to a decline in demand. However, the auto major, said that the situation had improved this month and the bookings had grown by 7 per cent as compared to December last year.

Is the company recovering from the demonetization unsteadiness?

Maruti Suzuki Chairman RC Bhargava told the media that demonetization did lead to dip in bookings as well as True Value sales in the month of November. He added that if one put October and November sales together, retail sales were down 20 per cent than previous year.

Mr Bhargava further said that it indicated that immediately after demonetization took place, certain amount of uncertainty and concern was there among people as what it meant but the trend had changed and from down 20 per cent last month they were now at plus 7 per cent in the month of December. Meanwhile, Maruti share price closed trading at almost 3 per cent higher on the NSE on 23^rd December, 2016.

Would the double-digit growth continue?

When asked if the company would still stick to its earlier stated double-digit growth guidance for the current fiscal, he said that till the month of November, they were growing in double digits. Even if things don’t go well, they would be close to 10 per cent.

Mr Bhargava stated that the only thing which he was not prepared to do at the point was to make a forecast for the next few months. He wanted to have little bit of evidence as what happened in January before he predicted for the whole year.

He added that the company was maintaining its production levels as planned and wholesale figures as well. Elaborating further, he said that the rural sales in the month of November fell by 11 per cent while sales during this month so far had grown by 18 per cent.

On drop in sales from Maruti True Value outlets, Mr Bhargava quoted higher interest rates for used cars and shortage of cash as prime reasons. Trend was reversing but it still was in the negative territory, he added.

The Gujarat Plant and new product launches:

When asked about Maruti’s upcoming plant in Gujarat, Mr Bhargava said that the manufacturing plant was on schedule and the first car would roll out from the month of February next year.

On new product launches, he stated that the company would be launching Ignis and Baleno RS in the coming days.