Six airbags, BS VI stage 2 may affect demand in lower end of car segment: Maruti Suzuki

Chennai, Dec 1

The regulatory changes in car safety norms and its impact on the production cost and sales price may impact the demand in the lower end of the segment next year, but the overall market size is also expected to grow, said a senior official of Maruti Suzuki India Ltd.

He also said that in the near term, increased interest rates are getting reflected in retail finance and one has to keep a watch on the interest rates as 80 per cent of car purchases are under finance. Further, the interest rate hike is also affecting the inventory financing.

The fitting of six airbags in some models and the implementation of BS VI stage 2 norms next year may have an impact on demand in the lower end of that vehicle segment, but the overall industry is expected to touch 4.1 million units, said Shashank Srivastava, Senior Executive Director, Marketing & Sales, Maruti India.

He said the industry is expected to close the current year with a total volume of about 3.8 million units.

Queried about the downward trend in commodity prices and the rationale for hiking prices, Srivastava said the prices are still high as compared to the rates two years ago.

He said the manufacturers are not able to pass on the cost increase fully and Maruti Suzuki is watching the price situation.

According to Srivastava, during December, the companies log highest sales with buyers trying to avoid paying a higher sum later as the manufacturers will hike their prices at the start of the year.

Srivastava also said the company will moderate the production as buyers may not want to buy a 2022 model in 2023.

He said the stock build-up for the industry as a whole is only about 20-22 days and hence production will not be greatly affected in December 2022.

On the sales trend in cars powered by compressed natural gas (CNG), Srivastava said the increase in fuel prices has slightly impacted the demand for such models.

However, the cost of ownership of CNG model is far less than that of diesel or petrol powered cars, he said, adding that Maruti Suzuki has added more CNG models to its portfolio.

"The company makes about 30,000 CNG cars per month," Srivastava said.

Maruti Suzuki closed November selling 159,044 units, up from 139,184 units sold in November 2021.

Within the overall numbers, the company logged lower sales in vans, exports and light commercial vehicle segments.

"We had missed a couple of export shipments last month. Cumulatively, the exports are growing," Srivastava said.