After more than six months of its launch, Maruti Suzuki is still struggling to keep pace with the demand for its cheapest sedan Swift DZire. According to market sources, the booking orders for Swift DZire have been piling up, resulting in a waiting-period of over six months for the model.
The Swift DZire, which is essentially a replacement model for the Esteem, was launched by Maruti Suzuki to strengthen its dwindling position at the entry-level of the sedan segment. The car was launched with an attractive price tag of Rs 4.49 lakh in March, 2008.
According to reports from the southern markets buyers were even turned away by showroom officials when they wished to book DZire.
A Maruti dealer in Mumbai said, "We are getting about 20 Dzire cars from the company every month as against the usual supply of over 100 cars. The demand is far exceeding the supply and we are finding it difficult to retain the buyers."
The waiting-period in other parts of the country including metropolis and Tier II cities is even longer compared to Maruti's premier urban markets like Mumbai and Delhi. According to a Maruti dealer in Bangalore, the waiting-period in that region has exceeded 9 months, and still there has been no official intimation from the company about the supply.
When contacted, a Maruti Suzuki spokesperson explained, "The demand for DZire has been way beyond our expectation at about 5,000 units a month. This is especially higher than other models in the same (A3) segment, with record bookings of about 1,500 units every month. But we have jacked up the production to almost double...though it may not be 5,000 units at the moment."
The slow ramp-up by Maruti Suzuki has resulted in a dismal overall sales performance of the company.
Hero Honda
Country's top two-wheeler maker Hero Honda saw its financial liabilities in 2007-08 soaring the maximum in the past four fiscals, even as the company returned to positive net profit growth in the last financial year. The total liabilities in 2007-08 increased by about 18 per cent to Rs 1,652.02 crore from Rs 1,405.67 crore in 2006-07, the company said in its latest annual report.
The company had cut down its liabilities in 2006-07 by 1.75 per cent from the previous fiscal.
The increase in liabilities was mainly for rise in trade accounts payable, accrued expenses, income taxes and other current liabilities, while long-term debt and deferred income taxes reduced during the financial year under consideration.
When contacted, the company's Senior Vice President and Chief Financial Officer Ravi Sud said, "Some of the liabilities shown is the tax that the company has to pay to Haryana government later as part of a tax incentive scheme."
The company reported a 12.89 per cent jump in its net profit at Rs 967.88 crore for 2007-08, compared with Rs 857.89 crore in the previous fiscal. It, however, had registered a net profit of Rs 971.34 crore in 2005-06.
The total income in 2007-08 was Rs 10,517.22 crore.
Hero Honda witnessed highest increase in trade account payable and other current liabilities by Rs 201.25 crore and Rs 81.81 crore respectively.
The company's decrease of Rs 31.05 crore of liabilities under long-term debt from the previous fiscal's Rs 144.56 crore was a single ray of hope.
Hero Honda's total financial liabilities for FY04, FY05 and FY06 were Rs 1,328.76 crore, Rs 1,357.58 crore and Rs 1,430.76 crore respectively.
It recorded marginal increase in sales to 33,37,142 units in FY08, against with 33,36,756 units in FY07.
A Mumbai-based analyst said, "The demand for small cars is shrinking and Maruti being the largest player in that segment, the company was directly affected. Despite receiving a favourable response for its DZire model, Maruti has failed to capitalise on the new model."
Maruti Suzuki's market share in the domestic market has shrunk this year. During the five months period of April to August this year, the company commanded a market share of 45 per cent as against 47 per cent for the nine-month period of April to December last year.
Meanwhile, other car makers including Korean company Hyundai Motors has recorded 30 per cent growth (April-September) in sales in the Indian market as demand for its latest product i10 (compact car) remains strong. Maruti Suzuki during the same period reported a growth of just 5.8 per cent.
