Suzuki Motor sees Indian PV market at 7-8 mn by 2030, Maruti aims 50% share

Pre-Covid it had predicted that the market would reach 10 million

Even as Suzuki Motor Corporation (SMC), the Japanese parent of Maruti Suzuki India, is bullish on India's  passenger vehicle (PV) market, it expects the market to end the decade lower than its earlier projection.

SMC expects the world’s fourth largest PV market to end the decade with 7-8 million units, against its earlier forecast (done in the pre-Covid years) of 10 million units by 2030, the company said in an investor call on November 8. India is SMC’s largest market by sales and contributed 55 per cent in its global sales.

“If the passenger car market continues as it is this year, we believe that there will be a situation where it will exceed 3.5 million units due to record-high sales in each month. In that case, we are also preparing various capacity (expansion) in anticipation of a market size of 7-8 million in 2030,” it said in response to a question on whether the company will be able to regain the growth phase it had envisaged earlier.

But the anticipation of a lower industry volume, which comes on back of pandemic-induced supply chain glitches and other macro factors, doesn’t make the India unit any less confident of the market potential and its ability to corner half the market, said a Maruti Suzuki India official.

“We have confidence in the long-term growth story of the Indian passenger vehicle market. It has already become the fourth largest in the world. We believe it can grow significantly from the current levels in the medium to long term. Most importantly, Maruti Suzuki remains committed to the Indian market and, along with its parent company, is investing in products, technologies, production capacity and other enablers of growth and customer service with an aim to have 50 per cent market share,” said Rahul Bharti, Executive Officer, Corporate Affairs at Maruti Suzuki.

To meet the incremental demand, Maruti Suzuki India has announced an investment of Rs 7,000 crore in FY23. The company’s Manesar plant production capacity is set to increase by 100,000 units to cater to the enhanced demand before its facility in Kharkhoda, Haryana commences operations in 2025.

Rating agencies and sales forecasting firms too expect the market to end the decade with less than 8 million units. Rating agency Crisil has pencilled in 7-7.2 million units by 2030. S&P Global Automotive, a sales forecasting and market research firm, estimates the market to end the decade with 6.5 million units.    

To be sure, the Hamamatsu-based firm has revised its global sales outlook upwards to three million units for FY23 from the earlier 2.7 million units on back of a strong operational performance of the India subsidiary. The revenue share of the India arm rose to the highest in seven years in the said period.

In an answer to how the company sees the demand scenario panning out in India amid rising interest rates and economic disparity between rural and urban India, SMC’s management said, “The economy is not without its share of gloom and doom, and recent GDP growth projections by financial institutions have shown a tendency to revise downward on India, so it is by no means a rosy picture."

Puneet Gupta, director, S&P Global Mobility, says the current trend seeing India's PV market is “unsustainable and a lot of is the result of pent up demand which has accumulated over the last two years. The real picture will emerge once the production and demand gets aligned.”  

S&P Global Ratings on Monday cut its FY23 economic growth forecast for India to seven per cent from 7.3 per cent estimated in September. But it maintained that domestic demand recovery would support growth in India.

The global slowdown will have a lower impact on domestic demand-led economies such as India, Indonesia, and the Philippines, it said. It estimates India’s output will expand seven per cent in FY23 and six per cent in the next fiscal year.