Challenge for us is supply chain rather than demand: Maruti's R C Bhargava

Maruti Suzuki, the country’s largest carmaker, expects demand for its passenger cars to outstrip supply in the months of June and July as it faces challenges in ramping up production amid the Covid-19 pandemic.

“We will not be able to assemble more than 30-40 per cent of what is normal production in June. So we will have no problem in selling what we make,” R C Bhargava, chairman of Maruti Suzuki, told Business Standard.

Bhargava said Maruti was only an assembler of cars and depended on each of the 370-380 vendors and tier 2 and tier 3 suppliers to provide components. “If they cannot produce the requisite components, if they are facing labour or logistics issues, or are still in restricted zones, we cannot increase our production. The big challenge for us is supply chain rather than demand,” he added.
 

Bhargava also pointed out that the company did not have to sell cars at discounted rates because of high demand. He, however, added he could not predict the scenario after July, and whether the current trend was merely “pent-up demand” after the lockdown.

According to the Society of Indian Automobile Manufacturers (Siam), the company sold 18,539 vehicles, including 13,865 in the domestic market, in May, after having zero local sales in April due to the closure of factories.
 

Despite the 88 per cent year-on-year fall, Bhargava had said the numbers hadn’t made him pessimistic as sales would go up gradually. There are already encouraging trends at the premium end of the market, especially for new models. Skoda India, for instance, which announced the launch of three new models (priced above Rs 10 lakh) in May, has seen an average of 50 bookings daily in the first eight days of June. The company sold 508 cars in five days last month after it started production on May 26.

Maruti resumed its operations in the Manesar facility on May 12, and in Gurugram six days later, in accordance with the government’s guidelines. Though the state government had given the company permission to open only the Manesar plant earlier, it decided to wait as both the plants are interlinked.