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Maruti likely to see some growth compared to last year: RC Bhargava

Second half of this fiscal year should be significantly better than last year, says Maruti chairman.

ET Now|
Updated: Jun 04, 2019, 03.55 PM IST
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The percentage of diesel as a percentage of total sales is going to come down now that in a sense will give an advantage to all makers petrol cars up to 1.5 litres, said RC Bhargava, Chairman, Maruti Suzuki, in an interview with ET NOW.

Edited excerpts:


Let us begin with the May 19 dispatches that has followed a weak April. We have seen the steepest decline in nearly a decade. What do you think explains this sharp fall?
The month to month comparison of falls can always be misleading. April and May last year were extraordinarily high months and they were extraordinarily high because at the end of March 2018, the inventories were extremely low as retail sales had been very high. Now, when you look at the sharp drop and this is higher since seven years it has to be related to the base from which you are looking at. If you look at the June base, it is much lower than the April-May base and we have a very different figure. So those percentage figures are really not comparable unless we look at each month’s base figure.

The point is that for the last four-five months, passenger vehicles as a category has been seen very lumpy sales. I recall when you were declaring your Q4 numbers, you said that once the election event is over, you will see a gradual increase and demand coming back. Are you already seeing signs ir of a demand uptick?
No, what I have said was after the elections, after a couple of months, the market will go up but before the markets going up, the election results were out 10 days ago, the government has been formed less than a week ago. It is not magic, that a new government is formed and the market suddenly changes direction. You have to wait to see what this new government is doing in terms of policy announcements, reforms, steps that they are going to take what would happen to the interest rates, what would happen to investment climate etc. Sentiment of the people which was obviously depressed and somewhat uncertain before the elections now needs to change and that can only change with what happens in the next couple of months.


How long do you expect demand to be subdued? When do you expect to see a pickup coming in first?
If you are going to look at the month to month figures, you probably will find that compared to last year, this year June is going to be around the same level because the base last year was lower. As we go forward, I think because the base last year, in subsequent months has been lower, this year you will probably see growth compared to last year even if nothing else happens.

Everyone has also been trying to understand the implications of the fact that we are seeing the end of the road for diesel cars in India and do you feel that perhaps post BS VI, Maruti might actually have a competitive edge by completely stopping the sale of diesel cars? How will that help you solidify your position?
See the discontinuation of diesel cars up to 1.3 litre is happening across the manufacturers and that is because of the cost of BS VI diesel cars compared to petrol BS VI cars. But remember, about eight years ago, there was not much of a diesel market in India. We are trending towards the same situation as 2008, 2009, 2010 when diesel were a small part of the market. That is going to happen again because cars above 1.3 litre, that is 1.5 litre and above diesel will probably be there, but the volumes are not going to be large.

The percentage of diesel as a percentage of total sales is going to come down now that in a sense will give an advantage to all petrol makers in cars up to 1.5 litres.

Despite weak dispatches, why is channel inventory going up?
That is not quite the case. Our shutdown is towards the end of this month. During that period, we have to keep some inventory so that during the eight days when there is no production, we can keep dispatches going. But when this shutdown ends and production resumes, inventories will be very low.

What about the sales for Toyota? Any update on that front?
Nothing has changed there. What we are doing with Toyota has been announced. They will start sales of the Baleno and as we had announced, they will do the production of the Brezza in their factory but that is still some time away.

At the cost of sounding a tad repetitive, the street wants to hear from you some sort of a decisive timeline on when you see a recovery,
It is impossible to give a timeline as to when we get to see up to 6%, 7%, 8% growth. But I would say the second half of this fiscal year should be significantly better than last year.

Finally we have got the budget coming up any wish list that we can get from you today? Anything that you are looking for under NDA 2.0?
The only wish list I have is that this budget should usher in a whole lot of reforms which have been pending for political and other reasons -- be it banking sector reforms or public sector reforms, agriculture and marketing reforms -- will get a new look.

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