Car demand in India weaker than expected, says Suzuki Motor Corp

Maruti Suzuki Ltd’s Japanese parent company Suzuki Motor Corp said the demand in India’s passenger vehicle industry has been weaker than expected in the April-June period.

“The Indian market is usually a bit slower in the first quarter than the rest of the year, but this year [demand] has been slower than expected, especially due to the election and adverse weather, including heavy rain and heat waves,” Suzuki Motor Corp’s management told investors.

After clocking record sales of 4.4 million units in the previous financial year with a growth of 8%, the industry has been projecting the growth to moderate to low-single digits in the current financial year. This is primarily on the back of the high base and weak demand for small cars.

Total domestic passenger vehicle wholesales in the first quarter of this financial year grew by 3% on year to 1.03 million units, according to the data from the SIAM. Maruti Suzuki’s domestic wholesales also grew just by 3.8% on year to 451,308 units during the period.

The subdued growth reflects the impact of the general election in the April-June period, because of which there was the restriction on carrying cash beyond a certain limit, and harsh summer, which restricted footfall at dealerships.

The weakness in demand at a time when automakers were pumping more vehicles to dealerships has resulted in higher inventory and discounts. The Federation of Automotive Dealers Association has raised concerns over a pile-up of unsold cars at dealerships and has called on automakers to rationalize production.

“We are currently adjusting production to reduce market stock and are closely monitoring demand trends. India will be in a critical period for the upcoming festive season, so we will closely monitor demand trends,” Suzuki Motor Corp’s management noted. 

Read More: Maruti Suzuki adjusts vehicle production to reduce inventory