Maruti upbeat about car demand staying high despite Covid headwind

“The demand for cars is going up and it will continue to do so in the long-term until and unless there is a collapse of the entire economy,” said RC Bhargava, Chairman, Maruti Suzuki, at a conference call on Tuesday.

According to him, production has so far remained unaffected despite lockdown restrictions in Maharashtra and Delhi-NCR, which are the country’s key auto hubs. “We are producing at full capacity with no shortages of any kind until now, including availability of labour,” he added.

While daily infections have been at alarmingly high levels and also more widespread, Bhargava remained hopeful about the days ahead.  “So far, there is no evidence at all of Covid-19 being a rural disease,” he said while driving home the message that demand from small towns has not been hit. 

Maruti has a pending order book of around 200,000 units with total inventory touching the barrel at just about 85,000-90,000 units. The company reported total wholesale numbers of 4.92 lakh units during January-March ’21, up 27.8 percent from the same period last year. 

Of these, domestic sales accounted for 4.56 lakh units (up 26.7 percent) while exports took up the balance 35,528 units, higher by 44.4 percent. On a yearly basis, Maruti sold 1.46 million cars last fiscal, down 6.7 percent from the preceding year. Domestic market sales accounted for 1.36 million units while exports totalled 96,139 cars. 

As for the Covid spiral, about 1,280 of its 30,000 workers have been infected and the company is aiming to vaccinate all employees and their families while collaborating with medical authorities in Gurugram. 

With oxygen availability being the biggest challenge during this second wave, Maruti indicated that this could impact those suppliers which use it in their processes. Any shortage arising as a result could, therefore, impact the supply chain. 

“It is a developing situation and we are keeping a tab on it,” said Bhargava. Likewise, as regards semiconductors, Maruti has so far managed the crisis with alternative suppliers which has helped in keeping its production schedules intact.