Maruti sees political instability affecting auto market growth

Wednesday 27 March 2013, 11:02 AM by

Due to the current deadlock between various political parties at the Centre, Maruti Suzuki India Limited believes that the economy's health is being affected. With the domestic automobile industry witnessing dwindling sales since 2012, things could continue in the same fashion if political issues are not sorted out, in the greatest interest of the democracy. Problems such as high loan interest rates and high fuel pieces are already being faced by automotive companies. Maruti feels that though domestic sales may go up during the ongoing fiscal, numbers would still be less as the market is still facing a downturn.

Echoing these words, Maruti Suzuki Chairman R.C. Bhargava said, “Political situation being what it is, how this will help in decision making and implementation is a question mark. Economic growth needs political stability.” Demand for vehicles has been severely affected by the downturn. It is natural that growth would only take place if there is more income to run vehicles and this cannot be seen happening, now that prices of diesel vehicles are also being increased every month. R.C. Bhargava does not see the current fiscal as being very different from the same period last year.

It is not just the Centre that is to blame for slow economic growth. Every state must realise its own responsibility towards contributing to the growth of the nation as a whole. However, one feels that if every region tries to separate itself for the sake of community growth, then it is difficult for the nation to grow as a whole, such as Telangana and Andhra Pradesh. Political parties need to stop taking the regional angle every time and focus on allocating funds for State economic development.

Coming back to the problems of the Indian automobile industry, increasing prices of diesel vehicles has brought down demand by 5 per cent in February, as against growth of 7 per cent seen in December 2012 and 9 per cent in January this year. But it still has been a good move to deregularise the prices of diesel in the market, as it was considered a necessary move by many industry experts.

Interestingly, while looking at Maruti Suzuki, one may not think that the industry is really going through a slowdown. Vehicles such as the Alto 800 and Wagon R are on the list of top ten selling vehicles month on month. Diesel variants of Swift, Swift DZire and Ertiga are on the waiting list. Maruti is still the top automobile manufacturer in the country, having scored the highest points in the Customer Satisfaction Survey done by reputed company J.D. Power Asia Pacific. Sales of Maruti vehicles are also up by 5.5 per cent from the previous fiscal, with sales of 9,43,156 units against 8,93,592 units in the same year-ago period. However, the truth remains that other manufacturers are not in the same boat as Maruti and political stability really needs to improve to make progress in this industry.