New Delhi:
The country’s largest automaker, Maruti Suzuki India (MSI), expects manufacturing activity to improve in the current quarter with a gradual improvement in the supply of critical electronic components, a senior company official said.
The auto major is also looking at ways, including strengthening its SUV portfolio, to return to a 50 percent market share in the domestic passenger car segment in the coming years.
The company’s cumulative market share currently hovers around 44 percent, while it continues to struggle in the fast-growing mid-size SUV segment.
“In the third quarter, an estimated 90,000 vehicles could not be produced due to the global shortage of electronic components that largely match the domestic models. Although still unpredictable, the electronics supply situation is gradually improving. The company hopes to start production in the fourth quarter. although it will not reach full capacity,” MSI’s Chief Financial Officer (CFO) Ajay Seth said in an analyst call.
At present, MSI has a cumulative production capacity of approximately 5.5 lakh units per quarter or approximately 22 lakh units per year at its factories in Haryana and Gujarat.
Mr. Seth noted that the company continued to experience a shortage of electronic components during the October-December quarter, especially during the holiday season when auto demand tends to remain good.
“Research, bookings and retail sales in the third quarter showed an improvement in succession. Enablers such as the availability of funds and interest rates remain favorable,” explains Mr. Seth.
Shashank Srivastava, MSI’s senior executive director (Sales and Marketing), who worked out the production scenario, said the situation has gradually improved since September last year, when the company was only able to roll out 40 percent of its production target.
“The situation in that sense is improving. However, it is still not 100 percent as you can see, and we are hopeful in January, February and March, we will continue to see this improvement, hopefully it will be above that 90 percent come true. … we may not make it to 100 percent,” he said.
Mr Srivastava further said: “When we will reach 100 per cent is actually not clear at this point as we cannot have a definitive judgment on that as it is a very complex supply chain involving not only Maruti Suzuki but all OEMs in India and not just India, but all over the world.”
When asked about market share, he noted that production constraints would make it difficult for the company to cross the 50 percent mark by the end of this fiscal year.
“So if you look at the December figure, wholesale market share was 48.3 percent and retail 49.9 percent, very close to 50 percent. However, if you look at the cumulative numbers so far for this year is around 44 percent So, judging by that, it seems that while the market share is close to 50 in December, it could be cumulatively difficult to get to that 50 percent by the end of the year. the current production scenario,” said Mr. Srivastava.
In the coming years, however, it is still quite feasible for the major automaker to achieve a 50 percent market share, he added.
Mr. Srivastava noted that the company remains a leader in the hatchback, MPV and van segment, lagging behind the competition only in the mid-sized SUV segment.
“If you look at our market share until December, for shutters it’s 67 percent. If you look at the passenger cars, it’s 62.5 percent. If you see the MPVs where we have the XL6 and the Ertiga competing against Innova, Triber etc, it’s 64 percent and for the vans, it’s 95.6 percent. Obviously, in all these segments, the company’s market share is over 65 percent or thereabouts. It’s the SUV space that takes us down has pulled,” he stated.
In the SUV space, the company is leading the way with the Vitara Brezza, said Mr. Srivastava.
“We currently have a weakness in the mid-size SUV segment and we hope to address this in the future by expanding our portfolio in this very critical category,” he noted.
As for the alternative technologies, Mr Srivastava said that given the high initial cost of batteries and the limited charging infrastructure network in the country, the carmaker believes that hybrids will be a very powerful solution at least for the medium term.
“They are scalable, they do about 40 percent of the work of an electric vehicle (EV) in terms of CO2 reduction, in terms of energy efficiency, but they are probably 100 times scalable. So in the medium term they will be a good option. And of course EVs have to be pursued for the long term as well. So all options have to be worked on,” he said.
In the company’s current order book, he said the automaker was behind by about 2.6 lakh units, with CNG units comprising 1.17 lakh units.