Maruti Suzuki’s December sales growth slower

Automobile market leader Maruti Suzuki India reported its December 2009 sales today. This month’s sales need to be viewed in the context of the slowdown that gripped the car market in the Oct-Dec quarter in 2008-09. As the global financial crisis affected India too, local banks faced a liquidity crisis and bank finance for cars dried up which affected offtake and the economic slowdown also hurt real demand.

  • In December 2009, Maruti’s sold 84,804 vehicles, 50.6% more than in the same month last year. By itself, this is good but is lower than the 66.6% figure achieved in November 2009. On a sequential basis, car sales are down by 3.4%.
  • Export sales are up 223% to 13,804 vehicles in December and are up compared to the growth seen in November and also up on a sequential basis.
  • Domestic car sales are up by 36.5% to 71,000 vehicles, considerably lower than the 60.1% growth in November. Sales have fallen 7% on a sequential basis.
  • The main reason for slower growth is its main A2 segment (cars like Alto, Wagon-R, Swift, A-Star), as sales grew by 41.8%. Sales was up 60.1% in November 2009 and is down 7% on a sequential basis. Sales in the upper-end A3 segment (SX4, DZire) too grew at a more sedate pace.

Note that these are primary sales, made by the company to the dealers. In relative terms, growth is excellent, even if at lower rates. The trend is one that needs watching. The argument that December sales are lower since customers would want cars with the 2010 badge does not hold much water. In December 2008, sales were higher than the previous month. And, being primary sales, these are also indicative of projected demand in January 2010. The stock was down by 0.4% at Rs 1553, at the time of posting.

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