Maruti Suzuki Sales Affected

Tuesday 06 September 2011, 14:57 PM by

Maruti Suzuki India Ltd. (MSIL) is the largest car maker of the country, which has a market share of around 45-48%. However, all is not well at the moment as MSIL is reportedly going through a period of declining sales, owing to several reasons. In August 2011, Maruti Suzuki India Ltd. saw a decline of around 12.7% in sales on a year-on-year basis. The company sold 91,442 cars in the previous month as compared to as many as 104,791 cars in the same month of last year. During the period of April-August 2011, the company saw a decline in its sales of as much as 8%. All this happened despite the company launching its awaited new Swift amidst much fanfare.

Many reasons have contributed towards this decline in sales, such as rising inflation, increasing interest rates of loans, launch of several new models by several other car makers and also, the ongoing dispute at the Manesar plant of the company. While the inflation and increasing interest rates of loans have hit the whole passenger vehicle industry, the other reasons have contributed more towards the declined sales.

To counter the entry of several new companies as well as various new models in the key segment of the company, MSIL has started expanding its product range. In 2011 itself, the company has launched the new Swift, SX4 diesel, Kizashi and A-Star Automatic, among others. Even now, Maruti Suzuki is planning to launch several new models in the Indian market in the next 5 years.

Manesar plant of the company, where popular models like the A-Star, Swift and SX4 are manufactured, has been a centre of unrest and labour dispute for the past few months. The production at the Manesar facility has been affected badly ever since the company decided to force the workers to sign a 'good conduct bond' before entering the factory premises. The company took this extreme step following the alleged attempts by the workers to sabotage the production and to deliberately affect the quality of the cars, which would definitely affect the brand value.

The disagreement between the workers and the management has led to halts in production many times. Not only does the production get affected, the on-going stand-off impacts the overall sales of the company as well as of the entire domestic automobile sector. According to Vishnu Mathur, Director General, Society of Indian Automobile Manufacturers (SIAM), “The Maruti labour problem will affect the industry if it continues further”.

However, the company is still positive about overcoming the crisis that it has been facing over the months and increasing its sales, especially in the upcoming festive season. Earlier this week, the Chairman of Maruti Suzuki India Ltd. (MSIL), R. C. Bhargava said, “We are all hoping that with the coming festival season, there will be a pick up in demand and things will become better. But overall for the year, I would be surprised if we can get to more than 8% or so of growth for the industry as a whole”.

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