Maruti is on a roll in some pockets, but growth roadblocks remain in others. The automaker has made a detailed presentation of its case at the ongoing Citi India Investor Conference.
Maruti looks to ramp up its capacities to 1.9 million units by the end of FY13. Amit Dave/Reuters
The Maruti Suzuki management has taken note of public enquiries, which are up 28% year-on-year. But consumers, it said, are holding back on actual purchases due to a string of factors like rising consumer expenditure, inflation and fuel price hikes. The management is all for more incentives to stimulate demand over the next few months.
One look at the growth graph, it’s enough to suggest that regionally South and West India are driving the momentum, but it’s North and East India that are stuttering. Among cities, growth is mostly coming from top 10 cities (10%) and rural India (>15%), but is somewhat losing its way in tier 2 /3 cities.
According to the management, in aggregate it has a cost plus pricing strategy. And within segments, it might not fully pass on costs as it seeks to counter the rising wave of competition. Input costs like steel are up 10% and rubber 20% year-on-year, which the company is still to pass on fully. Over the next 1-2 years, the management is seriously considering stepping up its margin by 100-200 basis points.
The management is looking at 4.5-5 million units as annual sales by 2016. Going forward, the company looks to ramp up its capacities to 1.9 million units by the end of FY13 and will commission a new 1 million unit in Gujarat.
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