Maruti Suzuki PV Production Down By 15.60 Per Cent In June 2019

The Indian carmakers are having a tough time with sales going south and to the extent of hampering production. India's largest carmaker which accounts over 50 per cent market share also has been reeling due to the slowdown and has been cutting down production for past few months. Maruti Suzuki passenger vehicles' (PV) production went down by 15.60 per cent in June 2019 at 110,641 units as compared to 131,068 units which it manufactured in the same month last year. The company has recorded a sales decline of 17.2 per cent in June 2019 selling 111,014 units of PVs in the Indian market against 134,036 units which it sold in the same month last year.

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The Mini segment has witnessed the biggest sales decline in June 2019 which has also reflected in production.

In June 2019, the biggest slump in sales was seen in Maruti's mini segment which was down by 36.2 per cent selling 18,733 units as compared to 29,381 units which were sold in June 2018. Evidently, the decline has reflected in the production as well which is down by 48.20 per cent at 15,087 units as compared to 29,131 units which were rolled out in the same month last year. The company has reduced the production of compact cars like the Swift, Dzire, Baleno and the new-gen WagonR among others by 1.46 per cent at 66,436 units against 67,426 units which were manufactured in June 2018. The sales of compact cars were down by 12.1 per cent selling 62,897 units as compared to 71,570 units which were sold in the same month last year.

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Maruti Suzuki has also cut down the production of the Ciaz despite it registering positive sales.

The Ciaz mid-size sedan was the only model which recorded a positive growth of 47.1 per cent selling 2322 units as compared to 1579 units which were sold in the corresponding month last year. However, Maruti has cut its production as well. Its production went down by 45.90 per cent at 2543 units against 4710 units which were produced in the same month last year. The production on Utility Vehicles with models like the Vitara Brezza, Ertiga, S-Cross and Gypsy went down by 5.26 per cent rolling out 17,074 units against 18,023 units in the same month last year. UVs recorded a sales decline of 7.9 per cent selling 17,797 units against 19,321 units which were sold in June 2018.

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The Maruti Super Carry LCV is the only product which production has been increased.

The production of Omni and Eeco (Vans) was also reduced by 27.87 per cent at 8501 units against 11,787 units which were rolled out in the same month last year. The Vans segment recorded a sales decline of 24 per cent selling 9265 units against 12,185 units which the company sold in June 2018. However, Maruti has continued finding success with its Super Carry light commercial vehicle (LCV) which sales were up by 24 per cent at 2017 units against 1626 units which were sold in the June 2018. The company has also increased its production by 47.02 units rolling out 2276 units against 1548 units which is manufactured in the same month last year. Total production of the company including PVs and LCVs was down by 15.60 units at 111,917 units against 132,616 units which it manufactured in June last year.

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The Indian auto industry was expecting reduction in the GST rates on PVs in the recent budget announcement.

The Indian car market has been reporting negative sales numbers since the beginning of the current financial year with several headwinds coming its way. Customer sentiments have been negative since the start due to increased prices and low credit availability. The industry was also expecting some favour to be extended by the government by means of temporary reduction in GST rates on PVs in the recent budget session which hasn't been met. That said, the budget committee has recommended providing partial guarantee to state banks and acquisition of up to Rs. 1 Trillion of high-rated assets from Non-Banking Finance Companies (NBFCs) which will help tackle the problem of liquidity crunch.