Next year not optimistic for Indian auto sector, affordable cars essential for growth of industry: RC Bhargava, Maruti Suzuki

It has been a record year for the Indian automotive industry as stakeholders expect sales to cross the 4 million mark in 2023. Amidst the optimism, India’s largest car maker, Maruti Suzuki India Limited reported its highest-ever quarterly sales volume, net sales and net profit. During a media interaction, TOI Auto got the chance to interact with RC Bhargava, Chairman, Maruti Suzuki India Limited, where he shared key insights related to the carmaker’s current growth trajectory and what is required to keep the show going.While Bhargava is satisfied with MSIL’s current growth in both domestic and export markets, he pointed to a key market that has seen a slump but is essential for sustaining the growth of the entire industry.

According to Bhargava, the downturn in sales of small, affordable cars is not a good sign because without them the Indian automotive industry will not be able to sustain its current growth level. “I expect that given the kind of demographic and consumers we have, there are 150 million to 180 million two-wheeler users in India. I believe demand for economic models should come given that cost rises are controlled. So that those users can start adopting cars. The importance of small cars coming back is that without them in India, we cannot sustain good growth levels in the car industry. Lately, the market has become a little distorted due to policy changes which have led to higher prices, small car buyers have had to postpone their car buying decisions.” Bhargava said.

Another big insight that the MSIL Chairman touched upon, was that the automotive industry is not very optimistic for next year and expects growth to be virtually stagnant. He also emphasised that the expected slow in growth is once again related to low sales in the economical small car segment and that the Indian industry needs it to kick back up to grow further. However, on the MSIL front, Bhargava said, “Unlike the overall industry, which thinks there will be flat growth, we are optimistic but I cannot share a number right now. Maybe later in the year, we will have a more clear picture.”
While going forward, focusing on driving small car sales is a key point of concern for MSIL, according to Bhargava this will not be achieved quickly. He stressed the importance of the segment by saying, “We still have 2 or 3 years before the small car market can revive, if it does not, then sustained growth at the current levels may not even last 6 to 7 years.”

Coming back to MSIL’s Q2 results, the carmaker has sold 552,055 vehicles. Sales in the domestic market were 482,731 units while 69,324 cars were exported. The same period in 2022 had seen total sales of 517,395 units comprising 454,200 units in domestic and 63,195 units in export markets. The company registered net sales of INR 355,351 million against INR 285,435 million in the same period the previous year owing to higher sales volume and product mix. The net profit for the quarter was INR 37,165 million, an increase of 80.3% over INR 20,615 million in Q2FY 2022-23.