COO of Maruti Suzuki agrees with SIAM's revised sales growth forecast for 2012
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Recently, SIAM altered its yearly sales growth forecast for the Indian auto market to 9-11 per cent from previously stated 10-12 per cent. Several car makers are of the view that the industry lobby should have further reduced the figures considering that the market has been sluggish in the Q1 of the current year. However, Chief Operation Officer, Maruti Suzuki India Limited, Mayank Pareek echoes the sentiments of SIAM. According to him, during the first three months of 2012, the market has witnessed a growth of 9.6-10 per cent against the previous forecast of 10-12 per cent, which was based on some underlying assumptions.
At the beginning of the year, inflation was not too high and thus, it raised speculations that the interest rates will reduce. Another assumption considered was stabilisation of the fuel prices and that it would not be revised further. However, the reality differed from the speculations and led the growth rate to come down to 9 per cent. Sports Utility Vehicles (SUV) and Multi Utility Vehicles (MUV) mainly drove the growth; otherwise the figures would have been much lower. SIAM's revised forecast stands correct relative to the outcome of the monsoon and the festive season. The positive outcome may cause a surge and the growth can be registered somewhere between 9 and 10 per cent for the current fiscal.
MSIL witnessed a dip of 10 per cent in the sales of its best selling Alto, Wagon R and A-star against the previous year. However, Pareek does not feel that the decline in sales has been caused by the slowdown in rural demand and neither thinks that the low demand will continue in 2012 owing to low monsoons received till date. According to his viewpoint, growth of Alto only dipped by 6-6.6 per cent in June 2012, which is fairly acceptable considering the massive hike in petrol prices. During the fiscal 2012, petrol prices were increased towards the end of May and were stable during the Q1. Ever since then, the price has been unstable, putting not just Alto but all the petrol models under radar.
To illustrate further, Pareek explained that during the Q1, there was a decline of 19 per cent in the petrol cars segment, while, at the same time the sales of diesel vehicles grew by nearly 50 per cent. Hence, Alto and Wagon R were just onlookers of the storm that shook the whole petrol car segment. However, both these models have been experiencing a steady demand in the rural region. In fact, at a time when the total growth of MSIL stood at 5 per cent, the rural sector reported a growth of 32 per cent for the company.
On being asked if the assumption by the company to clock a growth of over 10 per cent this year will be based on a good monsoon and whether, a below average monsoon will affect the sales, Pareek said, “See, I am a born optimist and being a marketer, you have to be an optimist. I expect that the monsoon should be alright, reasonably good. There is inherent pull in India despite whatever is happening around, and despite the interest rate and fuel prices being high. I expect that Maruti Suzuki should clock at least 10% growth and let us not forget that this is against the backdrop of lower base for Maruti last year because last year for some period we had industry-relation problems in one of our plants and that affected our supply. So we should be able to clock 10% growth, for sure.”
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