NEW DELHI: Growing traffic congestion and the rising popularity of shared mobility players such as Uber and Ola have lowered the demand for new cars in the top metros of the country, Maruti Suzuki said on Wednesday.
Demand has further been squeezed as fuel prices continue to remain high and insurance premiums and vehicle financing rates get dearer, the company — which accounts for one out of every two cars sold in the country — said. “The metro markets are currently under pressure in terms of growth. There are concerns,” RS Kalsi, senior director (sales marketing) at Maruti Suzuki, told TOI here.
“Traffic congestion, (and) shared mobility are some of the factors that are impacting the generation of demand,” he said while spelling out what had impacted the sales numbers of car makers in the metro cities.
Urban markets lag rural in car sales for 2nd year
“If a customer decides not to buy, we can’t do anything in that situation,” Kalsi said. New vehicle sales have been under pressure and Maruti has witnessed flat growth over the past two months (year-on-year). The weak numbers have been particularly alarming as they have come during the festive period which normally is a bumper period for carmakers.
Kalsi said that urban markets, which provide a larger share to the sales of carmakers, are feeling the pinch. They lag the rural markets which are growing at a faster pace. “The rural markets have grown by 12-14%, while the urban markets are moving slower. The urban growth is estimated at 2-3%.”
This will be second year when the urban markets — which provide the bulk of sales in India — are proving to be laggards. In 2017-18, sales had fallen by 20% in Mumbai, 11% in Bengaluru, and 4.5% in Chennai. Delhi and Pune, also heavy-volume markets, could manage only a 2% growth.
Speaking about the sales pressure on the retail front, Kalsi said the festive season has “not been on expected lines” this year on account of the slowdown pangs. “The sales were not on expected lines, and the growth was on expected projections. We grew 6%, which was not very good. We were expecting to move up by doubt-digits, and could only grow by around half.”
Discounts have been high in the industry as companies try and lure buyers to showrooms. Maruti has already said that discounts were higher by nearly 20% in the second quarter of this fiscal against the same in the previous year. “The average discount was around Rs 15,500 in the second quarter of last fiscal, and the same was around Rs 18,500 in the same period of 2018-19,” Kalsi said.
Pressure due to low demand has been felt across vehicles categories, but has been particularly strong for first-time buyers. “When the sentiments are down, every category witnesses pressure.” Kalsi said it is “difficult to provide a forecast” on how the market would behave in the new fiscal, considering the variety of factors that have been pulling down the numbers currently. However, he pointed out that there were certain positives that were also building up in the market. These include the growth in GDP, the slight softening in fuel prices and the crop support prices announced for the farmers. “But at the end of the day, the sentiment is determined by the sum total of all the factors.”
Maruti drives in the new-gen Ertiga
Maruti Suzuki drove in an all-new version of its MPV Ertiga with an entry price of Rs 7.44 lakh. While the petrol variants of the new Ertiga are costlier by up to Rs 71,000 from the outgoing version, the diesel versions are costlier by up to Rs 20,000. The petrol variants, including two automatic transmission trims, are powered by an all-new 1.5 litre engine and are priced between Rs 7.4 lakh and Rs 9.9 lakh. The diesel variants carry the same 1.3 litre engine as the earlier version and are priced between Rs 8.8 lakh and Rs 10.9 lakh (all prices ex-showroom Delhi).