Maruti Suzuki seeks govt help to revive small car demand in India

The company also said that it was not seeing an immediate impact from China's restrictions on rare earth magnets exports

Maruti Suzuki has sought government’s intervention to revive small car demand in India. The company said on Monday that the demand is not improving because of affordability issues and financing bottlenecks, which is stopping people from upgrading to four-wheelers from two-wheelers.

 

The company also said that there will be no immediate production impact from China’s export curbs on rare earth magnets -- which are used in electric motors and other automotive parts

 

In May, the company’s mini segment (Alto, S-Presso) saw a significant year-on-year drop of 31.5 per cent, selling 6,776 units compared to 9,902 units last year.

 

“Government should understand that people are unable to upgrade from two-wheelers to four-wheelers now. Government has to work out some idea. If we keep big car and small car on the same table, affordability will be a huge issue,” said Partho Banerjee, head of sales and marketing at Maruti Suzuki.

 

He added that the company is not seeing any dip in enquiries for small cars, but conversion is becoming a concern because of affordability and financing constraints for the probable customers under this bracket. The company added that the new additional features added to these cars have pushed the price up in recent years.

 

 

Industry experts say the average monthly income of an entry-level car buyer is Rs 65,000– Rs 75,000, while SUV buyers earn between Rs 75,000 and Rs 90,000. The slow growth in the job market also affects this segment.

 

Banerjee added that the recent border tensions between India and Pakistan had a major impact on the company’s domestic sales in May.

 

“I would also like to highlight the recent military action along the borders of J&K, Punjab, Rajasthan, and Gujarat. These are markets where we enjoy very high market share. Our market share there is almost 55 per cent, and all these markets contribute close to 22 per cent of our sales, and the cities which were impacted -- almost 9 per cent of our sales come from this market,” Banerjee added.

 

Maruti Suzuki witnessed a 5 per cent dip in its total domestic sales to 148,858 units in May.

 

Rare earth magnets

 

Maruti also brushed aside the apprehension that China’s export curbs on rare earth magnets would hit the industry hard. It said there will be no immediate production impact.

 

This comes after the industry stakeholders informed the government last week that production could be hit shortly, as China placed export curbs on rare earth magnets and related materials, in response to the US tariffs that came into effect on April 4. China controls over 90 per cent of global processing capacity of these magnets, which are used in fields as varied as automobiles, home appliances, and clean energy.