Maruti Suzuki has recorded good double-digit growth in retail sales in the festive season with smooth production and inventory management driving the sales. “One will see some noticeable improvements in terms of dealer stock by the end of the month,” said RC Bhargava, Chairman of Maruti Suzuki.
1. The sales performance in the festive season reflects a sound appetite from consumers.
Maruti Suzuki had witnessed a better retail sales performance this year’s festival season. Bhargava said that during the festival season, close to 3 lakh units were sold with an increase of 14% year over year as compared to the same period last year from the end of Shraadh to Diwali. Sharp growth in retail sales reflects consumer demand for the models in Maruti’s portfolio, but the company reported pressure on urban demand was noted earlier this year.
While festive sales have increased manifold, Bhargava said wholesale numbers have been flat rather than increasing. This is in line with Maruti Suzuki’s strategy of calibrating production closer to demand so that dealer inventory does not pile up and goes beyond a 30-day supply.
2. Strategic Production Calibration for Inventory Optimization
On October 29, the company said in the quarterly earnings call that it has focused on managing its inventory. The excess inventory at dealerships had recently crossed the optimal 30-day mark, so the company took corrective measures. Maruti has taken deliberate steps to bring the production volumes in line with the market demand, which should reflect positively on the inventory levels by the end of October.
The new bookings and fresh enquiries for the company have already crossed last year’s total figures. Bhargava observed that the company’s effort to “keep inventories at a reasonable level” will help ensure a better supply chain with less pressure on the dealerships.
3. Trends in Urban and Rural Demand
Maruti Suzuki witnessed contrasting trends between its urban and rural markets at the half year ended into FY25. The first half of the fiscal overall growth stood at nearly 8% in the rural market, which testifies to the fact that the brand was gaining impetus outside metropolitan cities, while the urban markets have shown weak demand during the period. For instance, the urban markets have stood at a 3 per cent dip wherein regional elections, and prolonged duration of the monsoons, can be said that caused lower sales in the market.
Luckily, during the festive season, good interest has been noticed both from urban and rural consumers, and Maruti feels this will continue into the following months. The strong demand from the rural market, in fact, reflects how robust this market segment has become and its positive look towards the rest of the fiscal year.
4. Dealing with Competitive Discounts in the Market
Bhargava said that discounts depend mainly on demand and the level of inventory dealerships hold. With efforts to reduce stock to more reasonable levels, Maruti expects the need for discounts to decrease in the coming months. Bhargava further said that the company’s “production has been aligned to meet market requirements,” which shows a lesser chance of high discounting if the inventory levels remain under control.
This will enable Maruti Suzuki to maintain its price competitiveness without sacrificing its profitability, especially since the company is keen on avoiding any build-up of inventory.
5. Conclusion (Promising Quarter for Maruti Suzuki)
With festive sales providing a positive boost to Maruti Suzuki, the prospects for this quarter look pretty bright. Targeted inventory adjustments with a balanced approach between rural and urban demand bode well for a stable foundation upon which further growth can happen. Bhargava sounds confident about the prospects for a “reasonable quarter.”.
In combination with the strategic calibration of production, festive season demand momentum will likely be quite beneficial for Maruti Suzuki in the face of a challenging market. Moving ahead, the adaptive approach Maruti Suzuki has toward its inventory management and sustainable growth will be advantageous for Maruti Suzuki in the stiffly competitive Indian automotive scenario.
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