Maruti Suzuki expects petrol-diesel sales gap to narrow fast

With the gap between petrol and diesel prices narrowing with the rise in latter's rates, country's largest car-maker Maruti Suzuki expects petrol car sales to nearly match those of diesel models, according to a top official.

"We had always expected this to happen, because the diesel option constituted almost 70 per cent of the cars which had diesel, this was driven by artificial pricing. Since the pricing gap is coming down, we will expect diesel cars to come back to 40-50 per cent.

I think we are getting there," Maruti Suzuki chairman R C Bhargava told reporters here on the sidelines of the annual convocation of the National Institute of Industrial Engineering last evening.

Stating that the current market condition is very depressed with decreasing sales, Bhargava said that sales driven by diesel cars last year have either come down or remained flat.

"It is not only for us but even for players with strong diesel portfolio. Diesel cars have lost their attractiveness in the market. It will take time for the economy to revive. We see a 5-6 per cent kind of growth this year too," he said.

On the inventory side, Bhargava said he expects this to be corrected this month, adding that currently it is slightly higher at the dealership levels.

"The production of any model has to be adjusted according to the demand," he said.
Bhargava said the company will make it sure that it maintains its market pie at 40 per cent.

"Competition is a given in today's age, you can not run away from it. All of them will try their best, but the market is large enough for everyone to grow in the mid to long-term," the Maruti Suzuki chairman said.

The company has reported a 14.4 per cent decline in sales in May at 84,677 units as against 98,884 units a year ago.

Bhargava said the company's Gujarat plans are on track and there is no holding back on the proposed facility there.

"There were some news items on protest, but it is by local political parties, which will be resolved. We expect the plant to kick-start by the end of 2015 or early 2016," he said.

Weakening of the yen and softening of commodity prices have been positive for the auto major as it has taken the pressure off the margins front, Bhargava added.

Terming the government decision on the quadricycle norms as "sound and sensitive," Bhargava said, "We share the government view on this, but if it is going to be used as a passenger vehicle, then it has to meet all the rules of segment".

However, he ruled out Maruti entering this segment.

Last month, the government allowed a new type of four-wheelers called quadricycles to ply on city roads as public transport but not as private vehicles.