After a challenging year marked by a vehicle pile-up at dealerships, Maruti Suzuki has made significant strides in reducing its inventory. With strong retail sales in the final three months of the year, the automaker reduced its network stock to just 9 days as of December end. Maruti Suzuki is optimistic about sustained demand momentum, forecasting a 3.5% growth in retail sales during the January-March quarter.
"Retail sales growth in the nine months of the financial year was 3.5%. Our retail sales growth in the fourth quarter is also expected to follow the same trend as seen in the first nine months. We would like to enter the new financial year with less inventory," Rahul Bharti, executive director of Corporate Affairs at Maruti Suzuki, told investors on Wednesday.
Maruti Suzuki saw its retail sales during the April-September period remain almost flat, with around 0.4% growth year-on-year as urban demand remained weak. However, the automaker clocked its highest-ever retail sales during the October-December period on the back of robust festival season demand and uptick in both urban and rural demand. The 8.3% growth in the third quarter helped the company record 3.5% growth in the first nine months of the financial year.
Towards the middle of 2024, the Federation of Automotive Dealers Association raised concerns over a pile-up of unsold cars at dealerships and called on all automakers to rationalise production. The association in June said total passenger vehicle inventory at dealerships was around 60 days (roughly 550,000 vehicles). The pile-up of cars at dealerships also resulted in OEMs offering discounts to clear the stocks.
While Maruti Suzuki retail sales rose 3.5% year-on-year during the April-December period, its wholesales increased by 2.6%. Maruti Suzuki had adjusted its vehicle production and dispatches to dealerships towards the end of 2024. Now with inventory levels at low levels, the companies have the flexibility to increase the prices.
Bharti noted that Maruti Suzuki's network stock at the end of the December quarter was only nine days. Maruti Suzuki is set to increase the prices of its vehicles in the range of ₹5,000 to ₹32,500 across all models from February 1. This follows a 4% price hike taken in January.
For the third quarter ended December, the automaker posted 12.6% year-on-year growth in its net profit as robust increase in volumes and a favourable mix of higher-margin products helped the company offset the impact of higher advertising and discount spending.