Maruti retail sales to increase 14 percent YoY during festive season

Despatches to dealerships were down 4 percent during the period, helping to reduced inventory at dealerships.

Published On Oct 31, 2024 08:00:00 AM

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Maruti Suzuki chairman RC Bhargava (inset).

Underlining the robust consumer sentiments in the automobile market, India’s largest passenger car maker, Maruti Suzuki, said retail sales of passenger vehicles have been pretty good during the festival season. The automaker estimates its retail sales to grow 14 percent in the peak festival period on a year-on-year basis.

Maruti operating profit declined almost 8 percent YoY in August-September
Maruti dealers had over 30 days of worth of inventory
Maruti received over 4 lakh bookings in the festive season

"[The] Festival season has been pretty good. We are expecting our retail sales, starting from the end of the Shradh period till the end of Diwali, will have roughly 14 percent growth, compared to the same period last year," Maruti Suzuki chairman RC Bhargava, told reporters after announcing the company's second-quarter results.

The festive season in India generally starts with Ganesh Chaturthi or Onam in Kerala towards the end of August or start of September, and extends till Bhai Dooj after Diwali in November across a majority of states. The period from the end of Shradh to Diwali is considered the peak festival season. This year, Shradh ended on Oct 2 and Diwali is on October 31. This is a crucial period for carmakers, with volumes sold accounting for a bulk of their annual sales. Consumers generally make big-ticket purchases during this time due to the cultural significance.

Bhargava's comments come as the company reported an almost 8 percent year-on-year decline in its operating profit for the August-September period, amid a drop in the company's wholesales, or vehicle despatches to dealerships. Maruti Suzuki's domestic wholesales during the quarter ended September dropped 3.9 percent YoY to 4,63,834 units.

When asked about the decline in wholesale numbers, Bhargava noted that the performance of the passenger vehicle industry is determined by the retail numbers, not the wholesale numbers. He said that retail sales in the festive season have been much higher than the wholesales. “We had a situation in the last two months where the industry as a whole has very large inventories available. Our dealers also had well over 30 days of inventory. We have been systematically planning production to cut output to suit the market requirement to bring down inventories. We have reduced wholesale despatches so that inventories can come down.” Bhargava said. Maruti’s chairman also noted that there were no significant changes in discounts during this festive season as inventory levels are well managed.

He added that there is no cause for concern that the festive season has not been up to the mark, as the company received over 4 lakh bookings during the period. “Festival season has been as good as one could have expected it,” he said.

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