Shashank Srivastava, Senior Executive Officer (Marketing and Sales), Maruti Suzuki India Ltd, says for the whole year, the market should end up this financial year at around 42.1 lakh wholesale numbers. That should be a growth of about 8.2% over last year’s figure of 38.95 lakh. Next year projections seem to be just about 43 lakh. So the growth projections on a very large base is a little smaller for next year than what we have seen in this year.
Strong growth for Maruti Suzuki India once again. What led to this and do you see the momentum hold through?
Shashank Srivastava: When it comes to industry figures, the wholesale number in February was 373,000 against about 335,000 last year. That is a growth of 11.3%. In fact, not only was this the highest ever number in February, it was the third highest ever month in the history of Indian auto industry passenger vehicles. So it has been a great month as far as wholesale is concerned.
However, the retail figure is about 40,000 less than the wholesale, which means that the inventory in the network goes up by that volume. Inventory estimates in the volume for the industry is about 300,000 units and that is a pretty large stock, which is about 27-28 days of stock. So going forward, it will now depend on how much the retail happens because I would expect wholesale and retail to be similar and not have to be too different as we have seen in the recent past because the pipeline is now full and therefore there is very little scope for OEMs to add on to the stock in terms of higher wholesale so that is the situation.
But if you look at the whole year, then the market should end up this financial year around 42.1 lakh or so. That should be a growth of about 8.2% over last year’s figure of 38.95 lakh. Next year projections seem to be just about 43 lakh. So the growth projections on a very large base is a little smaller for next year than what we have seen in this year.
So the growth projections are clearly smaller, just around 8% this year and almost flat for the coming year. But since you talked about how the retail numbers are the key monitorable going forward, what are you witnessing as a trend there? Is it the small car segment or the CNG segment, what are the trends on the ground?
Shashank Srivastava: About the future for the small car market, one of the reasons why we have seen a decline has been the affordability factor has come down, which means the prices have gone up faster than the income levels in this segment. We expect that going forward, if we see economic growth, the demographics of our country and the fact that there are 45-47% of the people as first-time buyers and public transportation not so developed, I would expect this segment to be significant going forward.
Also going forward, we should see some sort of a turnaround maybe in a couple of years. Our expectation from current research seems to be 2026 second half. On the CNG front, yes, CNG has had a very good run. In fact, the growth in this year so far has been 52%. Maruti Suzuki has a market share of about 70% in the CNG market, so it is a very crucial market for us.
In fact, for Maruti Suzuki, 26% of the total sale is now CNG. The basic reason why CNG has done so well for Maruti Industries is that the cost of running CNG vehicles is much lower than diesel and gasoline. As long as these price differences in the fuel prices continue, CNG will have a good run. I would expect the growth for CNG next year to also be pretty good.
Could you update us on the market share as well? We believe Maruti has gained marginal market share overall in the month of February. Any comments on the same?
Shashank Srivastava: The market share for Maruti Suzuki is about 43% for February. It is pretty good overall for the year April to February. Also, the market share is increasing about 0.4%. And as I mentioned earlier, the reason is that Maruti grew faster than the competition. The overall growth for Maruti is upward of 9% as against 8% or so for the competition for the whole year. Of course, driven largely by the introduction of those SUVs, including the Grand Vitara, the Fronx, Jimny and the Invicto MPV. So those have given us those additional numbers.
Going forward, our target remains 50% of the market share and that means we will have to improve our market share for the SUV segment because the SUV segment is now about 50% of the total market. There our market share is just around 22%. So unless we improve our market share in the SUV sector, it might be difficult to achieve 50% because we are already at 70% of the hatchback market. We are 55% in the sedan market, 94% of the van market and we are 52% of the MPV market. Clearly, our task is cut out very clearly. In order to achieve 50% market share, we have to improve our share in the SUV segment.
Also talk to us about the discounting in the system because we understand that for certain models, discounting has actually gone. Could you quantify it for us on a month-on-month basis? How has discounting moved?
Shashank Srivastava: As a general trend, if you are comparing the discount levels for January and February with December, it is a little different because in December, both the OEMs as well as the dealers do not want to keep previous year’s stock which is 2023 stock, carried forward to 2024. Obviously, you would see lower wholesale in December and retails much higher as people push through higher sales promotion levels, the OEMs. That moderates in January and in February, as we have seen, even in this current year.
As I said, there may be specific models, depending on the segment or the powertrain that they have where you could see higher or lower discounts, but those are specific conditions. As a general trend, you would see a decline in the discount levels in the New Year months, January, February.
As far as the headroom for the future is concerned, it is really now going to depend on the booking and the inquiry level going forward because the luxury which was enjoyed by auto OEMs in the last three years which was to continue with wholesale, even if retail comes down, because there were supply side constraints, and therefore the stock levels at the dealership was low.
Therefore, one could add to the stock levels, inventory levels at the dealership by pushing wholesales. Now with the current levels of stock at the dealership may not be possible. And therefore, any wholesale and any growth in the future, as far as the wholesale number is concerned, will entirely depend on the retail movement.
