Demand for Maruti CNG vehicles growing: Bhargava

Maruti Suzuki India Limited (MSIL) has moved away from diesel vehicles and is now concentrating on petrol. However, the company is also pushing CNG as a cleaner alternative.

“Maruti, this year, has no diesel vehicles and the share of petrol vehicles has gone up substantially. More importantly, CNG demand has gone up by almost 50 per cent,” MSIL Chairman RC Bhargava said on the sidelines of announcing the company’s Quarter 2 results.

“I think the importance the government is giving to CNG is being reflected in the way the growth of demand for CNG vehicles is happening. We will continue with our programme of maximising production and sales of CNG vehicles keeping customer demand in view,” he added.

Maruti Suzuki India Limited reported a Quarter 2 FY 2020-21 increase in vehicle sales as compared to last year, the company announced on Thursday.

MSIL sold a total of 393,130 vehicles during the Quarter, higher by 16.2 per cent compared to the same period previous year. Sales in the domestic market stood at 370,619 units, higher by 18.6 per cent and exports were at 22,511 units, lower by 12.7 per cent.

“The net profit in Quarter 2 of the previous year FY19-20 was higher due to mark-to-market gains on the invested surplus and lower tax provision. As a result of this, while the operating profit increased by 71.7 per cent over the same period previous year, the net profit increased by 1.0 per cent,” a statement said.

“From April-September FY 2020-21, MSIL sold a total of 469,729 vehicles, lower by 36.6 per cent compared to the same period previous year. Sales in the domestic market stood at 437,646 units and exports were at 32,083 units,” it added.

“The second quarter has been much better than the first quarter. In the first quarter, there was no production for almost two months and comparison to the second quarter is meaningless. Compared to the second quarter last year, Maruti Suzuki has performed better,” said Bhargava.

“The performance level has certainly improved. It is certainly better than perhaps what a lot of people would have assumed would happen in the first full production quarter after the lockdown,” he added.

Regarding the rest of the calendar year, he said: “October is going to be a good month for production and sales. Diwali is still to come and we expect November will be okay. December is the month when all carmakers go out of the way to minimise inventory with the factory and dealers. There are all kinds of schemes and discounts and December will be alright. After that, the situation is hard to predict because the impact of the festivals will be over. To a large extent, I believe that people wanting personal vehicles will be over.

Elaborating on the reasons for growth, he said: “The positive side will be that the monsoons have been good, crops have been bumper crops and the rural areas, which are even today contributing substantially to growth of sales in the second quarter. The rural segment will continue to grow substantially.”

However, there remains a question mark on urban demand. “We don’t know how the Covid-19 situation will develop. We don’t know what the urban income levels will be after this is over and how much purchasing power will be left with people in urban areas because the economic downturn is there, GDP growth is expected to be zero or somewhere near zero and with that situation, I don’t think there can be an urban demand and not because people don’t want a car but because people can’t afford the cars,” he said.

“I think the government understands and appreciates the need to keep a watch on the situation and the importance of the automobile industry for creating jobs and growing manufacturing. Keeping that in mind, I am sure the government will keep the question of demand creation very much in their minds when further policies, whether it is stimulus or any other of policy decisions going ahead. We will not make a prediction for Q4 or next year because we would like to see how things pan out in the next few months,” he concluded.