Maruti confident of double-digit growth in spite of note ban

Says bookings grew 7% in the first three weeks of December

The car market seems to be inching back to normalcy after a temporary shock from demonetisation. Maruti Suzuki, India's largest car maker,  said bookings grew seven% in the first three weeks of December, after shrinking 20% in November. 

The rural market, surprisingly, has grown at a much higher pace of 18% this month, after falling 11% last month. The rural market brings close to one-third of the sales for the company. This segment has done better than the overall market this year. Against an 11% growth in the domestic market, the rural market has grown 14% for the company. 

Maruti

According to Maruti Chairman R C Bhargava, the situation has improved after a short spell of uncertainty among buyers. “It seems to be going back to normal levels for us. We will meet the target of our wholesale to dealers for the month of December.” 

Commenting on the industry, he said everyone should see a gradual recovery, even if with some lag. 

Maruti enjoys 48% share in the domestic passenger vehicle (cars, vans and utility vehicle) market. The company said its Omni and Eeco have been more impacted, since these also have a commercial use. 

The company had sold 1.3 million vehicles in the domestic market for the year ended March 2016, up 11.5% over the previous year. For FY17, the Suzuki-promoted company has set a target to grow sales by double digits. Its domestic volume grew 11% in the eight-month period between April and November. 

According to Bhargava, he doesn't want to make a forecast for the January-March quarter. In the worst case scenario, the company’s growth would not be very different from 10%, he added. There was an element of worry, though. 

“I want to have a little bit of evidence as to what happens in January before we predict for the whole year,” Bhargava said.

Maruti’s performance has a significant bearing on the industry’s growth due to its size. The Society of Indian Automobile Manufacturers had early this month maintained its expectation of a double-digit growth for the whole year. Industry volumes grew 9.84% in the April-November period. 

Hyundai, second biggest after Maruti, has said it will meet its 2016 (calendar year) target of producing 665,000 vehicles and selling 500,000 units in the domestic market. 

Rohtak R&D centre to get Rs 2,000 crore
 
Maruti plans to invest an additional Rs 2,000 crore in its research and development (R&D) facility at Rohtak in Haryana. C V Raman, executive director (engineering), said the company had readied test tracks at Rohtak. The majority of testing for the Brezza was done in India. “We are going to invest another Rs 2,000 crore to augment the capability further at Rohtak by 2019. This would take the company's total investment at Rohtak to Rs 3,800 crore,” he added.