What is surprising about Maruti Suzuki’s passenger car volumes in November is the extent of the fall. At over 27 per cent, this must be one of the sharpest declines in any month. What’s also worrying is that the segment that comprises the Alto, Wagon-R, Zen and Swift models, and which accounts for 75 per cent of domestic sales, has fared badly with volumes down 27 per cent. Swift is perhaps the only model in the segment that’s selling well, but the volumes are obviously not big enough to offset the poor offtake of other models.
Between April and November, the segment has seen a drop of 1.8 per cent in volumes. Given the current environment, it is unlikely that this segment will see any growth for the rest of 2008-09, despite the launch of the A-Star. Even if A-Star does attract buyers, being a new car, it has a tough competitor in Hyundai’s i10, which has done exceedingly well. Already, Maruti’s share in the home market, which was 59 per cent in 2008-09, has come down to around 57 per cent between April and
October 2008 (source: SIAM). Hyundai’s share is up from 21 per cent in 2007-08 to close to 25 per cent for the April-October 2008 period. Industry watchers say Maruti should perhaps have postponed the launch of the A-Star till market conditions were better. The Rs 17,936 crore firm is obviously banking on the A-Star, having priced it competitively in the range of Rs 3.5-4.2 lakh — some variants are even cheaper.
Between April and now, Maruti’s volumes in the home market have come off by 2 per cent. It’s unlikely that Maruti will sell higher volumes in 2008-09 than it did in 2007-08 even though the SX4,Dzire and Esteem continue to do well — volumes were up 10 per cent in November. However, revenues should grow in double digits because exports are doing reasonably well. Also, lower raw material prices should ease margin pressures. However, that will not be enough to boost the bottom line, and most analysts are expecting a net profit fall of 10-13 per cent over the Rs 1,700 crore posted in 2007-08.
