Maruti Suzuki’s sales flash for November’08 looks scary and explains why the auto industry is going on a production slowdown. It sold 52,711 cars during November 2008, down a fifth from the same period last year, and domestic sales were down 27% to 47,704 vehicles. In October –which people thought was a bad month– the respective figures were 7% and 8% respectively.
The only segment that is doing well is the A3 segment, with the SX4 and Dzire flying off the shelves. The last two are relatively new models and the diesel version of the latter is a bestseller. Now, November could be an exceptional month because the company may be lowering despatches factoring in unsold inventory at the dealers’. Maybe, December may see a better showing.
The Maruti Suzuki share price was down 9.4% today, which is surprising considering that the writing has been on the wall. So will the situation improve? Well, for one, raw material prices are all falling, so costs should fall to some extent. Price cuts could help in bringing the fence sitters back; the fear of them waiting further should not prevent companies from trying. Interest rates are likely to fall, right now that’s only on paper. Consumer confidence and buying power may take time returning, but till then the industry has to do everything possible to spur demand.
Maruti’s A-Star is one such thing, a new product at a good price that gives superb mileage is just the thing that people want. Now the A-Star which has been launched will pep up the A2 segment but may not be enough to pep up overall sales. Still, it’s perhaps the best thing to happen for Maruti.