Shift in sales towards cars priced below Rs 5 lakh: Maruti's R C Bhargava

It is nowhere near the company's average sales in a month. We are producing vehicles that constitute only 60% of our capacity in Gurgaon and Manesar, Bhargava said

With sales of Maruti Suzuki reaching 100,000 in July this year, there are hopes that passenger cars are getting back on track earlier than many analysts had projected. But Chairman R C Bhargava, in an interview with Surajeet Das Gupta, puts these numbers in perspective and says they are nowhere near normal sales and demand cannot be predicted for the coming months. Edited excerpts:

What explains the surge in July sales, which are close to what you were doing last year in the same month?

There is pent-up demand. After all, there has been a long lockdown from the end of March, when production and sales were halted till the second week of May, when factories reopened. This has helped in sales hitting 100,000 in July.

Would you say this trend means the industry is getting back to normal?

It is nowhere near the company’s average sales in a month. We are producing vehicles that constitute only 60 per cent of our capacity in Gurgaon and Manesar. Also sales in July should be compared to those of July 2018, rather than July 2019, which was a bad month. So comparing to a low base does not give the full picture. In July 2018, the company sold more than 154,000 vehicles, while last July, they fell to 98,201.

What is the capacity that you have?  

Two plants together, it is around 170,000 a month. Sales are dependent not only on demand, but also on whether the company producing enough vehicles and dealer availability. Due to sporadic lockdowns even after the country went through the opening up, production was affected and many dealers had to shut shop.

Have you seen any change in the sales behaviour of customers and downtrading by them?

In Maruti Suzuki, there has been a shift in sales towards vehicles that cost less than Rs 5 lakh, whose share went up by 4 percentage points in July over the same month last year. They constituted about 28 per cent and now they are 32 per cent. Some of it is because of downtrading. Many customers are also now going for a second car, but prefer to buy an affordable one.

Would you like to project the sales for the next few months?’

I really can’t.