Expecting sales to cool off on a high base of FY24 when the industry advanced 8.45% to a record 3.9 million vehicles, Society of Indian Automobile Manufacturers (Siam) has projected a moderate 3-5% increase in passenger vehicle sales this fiscal in India. Maruti is betting on the launch of the new generation Swift and Dzire models -expected to go on sale later this year – to drive overall volume.
Sales of compact cars has been under pressure amid a shift in buyer preference from hatchbacks and sedans to sport-utility vehicles (SUVs). Domestic compact car sales fell about 4% to 828,000 units in FY24.
Maruti has asked part vendors to gear up for supplying a total of 2.4 million units this fiscal comprising domestic sales, exports, light commercial vehicles, and sales to Toyota Kirloskar Motor. This will mark a 10% rise from FY24.
Confirming the plans, Rahul Bharti, head of corporate affairs, Maruti Suzuki said, “The total production of components is the sum of domestic PV sales, exports, OEM (original equipment manufacturers) sales, LCV sales, and parts made for Grand Vitara. Considering fluctuations and the need for margins etc a request for preparedness for components for 24 lakh (2.4 million) volume has been conveyed to vendor partners,” he said.
Meanwhile, to meet its plan of doubling output by 2030, Maruti plans to step up exports significantly and invest ₹1.25 lakh crore to continue its rapid capacity expansion plan.
This would also entail sizeable capital expenditure in research and development, the company informed vendors at the meet. Maruti exported 283,000 vehicles in FY24 and plans to scale it up to around 300,000 vehicles in FY25, the company said at a quarterly investors’ call last week.
If Maruti maintains its production and sales guidance given to vendors for FY25, it would be the third consecutive year of record high annual volumes for the company.
The Suzuki Motor Corp unit could even surpass analysts’ projections. For instance, CLSA has pencilled in a volume estimate of about 2.27 million units for FY25, US brokerage Jefferies has estimated about 2.28 million units, Kotak Institutional Equities expects 2.21 million units and Morgan Stanley has built in 2.3 million units for this fiscal.
Maruti’s attempt to outgrow industry suggests the company is aggressively looking at clawing back share in the highly competitive market. The company has managed to arrest a decline in market share and recoup some ground it lost to rivals in the last three years. In FY24, Maruti gained 100 bps market share to 42% thanks to higher SUV sales.