A saturated demand for new cars in Japan has helped India’s largest car maker by volume, Maruti Suzuki, to post higher sales in India than sales of its parent company Suzuki in Japan in 2008.

Sales of Maruti Suzuki India (MSIL) during January-December 2008 stood at 697,850 units while those of Suzuki Motor Corporation (SMC) for the same period stood at 679,215 units.

The comparable growth for MSIL in India comes on the back of an almost 2 per cent decline for the company in a year-on-year basis during the calendar year. Its sales were higher in calender year 2007 at 710,532 units, according to the data provided by the company.

R C Bhargava, chairman, MSIL, said, “The Indian market is far from being saturated when compared to the Japanese market. In addition, the recession in Japan hasn’t helped sales at all. It has been a difficult year (financial year) for us too, with not much of a revival expected in the upcoming months also.”

“But, we are not scaling down operations especially as there exist a huge market yet to be tapped and also that we have posted a compounded annual growth rate (CAGR) of 14 per cent in the last 10 years,” he added.

According to Bhargava, the growth in Suzuki’s sales in Japan was hit hard due to presence of a restricted demand having limited customers who are the first time buyers. Most car buyers in Japan today are those who are looking to replace their existing car with a new model. In India, a big chunk of MSIL sales comes from the first time car buyers, who can be from urban, semi-urban and even rural areas. MSIL only recently started to make in-roads into rural areas, equipped with special rural financing packages to facilitate easy purchases.

However, new model launches mainly by competitors like Hyundai Motor India, Tata Motors, Skoda, Fiat and General Motors have dented Maruti’s sales.

The severity of the downturn has been such that Maruti’s share in the domestic market has remained stagnant at 46 per cent, while that of Hyundai has increased to 16 per cent from 13.73 per cent in the April-January 2008-09 period.

“There wasn’t much of growth in January (2009), while February and March won’t post high growth either as there was a surge in sales last year due to the excise duty cut. Growth in the coming quarters will be mild but we are going ahead with our planned launch of Ritz (Splash),” said Bhargava.

Meanwhile, Hyundai’s i10 and Santro, Tata Motors’ Indigo CS and the new Indica, Skoda’s Fabia and General Motors’ Spark have been well received in the market. This coupled with aggressive marketing campaigns and attractive pricing by such manufacturers had impacted Maruti’s sales in the recent months.

Maruti Suzuki sells 12 models in the domestic market, seven of which belong to the compact car category, while two are mid-sized sedan and two are sports utility vehicles and one is a multi-purpose vehicle.

source: Business standard

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