Maruti, Hyundai may beat the cash blues, top sales targets
MUMBAI: Maruti Suzuki BSE 0.67 % and
Hyundai
Motor India, the country's top two car makers, are hopeful of
meeting their annual production targets despite a slump in demand after the
government's demonetisation move.
Industry
executives ET spoke with said the two companies are likely to top their
internal targets on the back of significant order backlog for some models.
Production at Maruti Suzuki may touch 1.58 million to 1.6 million units by the
end of the current fiscal against the internal target of 1.565 million, said
several people in the know of the plan.
RC Bhargava,
chairman of Maruti Suzuki, confirmed that the company will meet its annual
target by producing over 1.5 million units despite the demonetisation move, but
declined to give an exact figure.
"We
are doing better than others. After an initial blip in bookings in November
there has been pick up in momentum of bookings. Clarity on annual numbers will
emerge only by January. Continuous innovation and the ability to understand the
customers' needs have helped us sustain our volume growth and market share over the years," Bhargava said.
"Brand
perception, ease of maintenance, spare parts' cost, distribution and sales network, all play a big part going ahead in the
future."
The
company is likely to end FY17 with a market share of over 47%, its highest in
the last decade and a half. On the back of strong retail offtake in the festive
month of October, Maruti Suzuki posted year-on-year sales growth of 14% in
November, the same month demonetisation was announced.
The
company said growth was on account of replenishing stock at dealerships which
had thinned due to strong demand in October. A senior company executive said
the car maker registered 30% year-on-year growth in retail in October, the
highest so far for the company.
Maruti
Suzuki is still sitting on inventory of close to 1lakh units, with Vitara
Brezza having a waiting period of 20-24 weeks and Baleno of about 18-20 weeks. There
will be a correction in dispatches in the final month of the calendar year, but
schedules for the next three months are healthy — ranging from 130,000 to
150,000 units per month.
The
incremental capacity is coming from the new Gujarat facility and stocking of
Ignis, the launch of which is likely to bring in the incremental numbers.
Rakesh
Srivastava, senior VP of sales and marketing at Hyundai Motor India, told ET
his company is on course to meet 2016 target of producing 6,65,000 units and
crossing the half-million units sales milestone in the domestic market this
calendar year, which may be marginally better than the original goal.
Srivastava
said demonetisation had a short-term impact, but the current ecosystem is
geared up with strong offers from the company and support from financers to
deliver good numbers. A strong product portfolio, flexibility and speed shown in terms of reacting
to changing market has helped the company meet targets, he said.
"We
don't change targets despite change in market condition. We believe that as
market leaders, we should have the ability to deliver original set goals in
spite of changing market condition by showing flexibility and speed by using
the product line up," said Srivastava, "We have looked at newer
segments of petrol SUV, institutional sales, shared mobility providers and deeper
rural sales to offset challenges in traditional market segment."
Source : Maruti,
Hyundai may beat the cash blues, top sales targets