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Decline in sales of cars priced less than Rs 10 lakh, which once accounted for 80 per cent of the domestic market, due to affordability issues is a cause of concern, Maruti Suzuki India Chairman RC Bhargava said on Tuesday.
As a result of the decline in sales of the segment, the overall growth in the car market is not happening, he said, adding people need more disposable income to bring back growth in the lower end of the market, although the company expects a 14 per cent overall retail sales growth this festive season.
“Certainly, the fact is that the market under Rs 10 lakh is not growing. In fact, it is declining. That is a cause of some worry because unless that lower end of the market grows, there is going to be no feeders into the upper market,” Bhargava told reporters in an earnings conference call.
He wondered “if 80 per cent of what used to be the market is not growing but is declining, how will the other market continue to make up for the rest of the growth of the market”.
The sub-Rs 10 lakh market at one time, in 2018-19 was 80 per cent of the total market in India, he added. In 2018-19, the passenger vehicle wholesales in India stood at 33,77,436 units as per SIAM data.
The sub-Rs 10 lakh segment now accounts for less than 50 per cent of the overall market. In 2023-24, passenger vehicle wholesales in India touched a record high of 42,18,746 units.
“That (segment of) market is not growing at the moment. That is a cause of worry. It is not the overall slowdown, but it’s the segmentation which has happened. The fact that growth is taking place only in the more expensive cars, I think that doesn’t make me very happy,” Bhargava said.
He was responding to a query on where the slowdown in the domestic passenger vehicles market is a cause for concern.
Even for Maruti Suzuki India, which has been traditionally the market leader in small and compact cars, growth is not coming from vehicles priced less than Rs 10 lakh.
“Growth is not coming from the under Rs 10 lakh for Maruti (too). We have volumes there, but the growth is not happening because of that. If we didn’t grow in the above Rs 10 lakh market, we would have been well below 40 per cent in our (overall industry) market share,” Bhargava asserted.
When asked for the reasons for the decline in the sub-Rs 10 lakh segment and why are people not buying cars in that category, he said, “Affordability”.
On whether some incentives from the government are needed to boost sales in the segment, he said, “I don’t know what is required, but we need people to have more disposable income.” Commenting on the festive sales, Bhargava said these have been “pretty good”.
“Our retail sales compared to the same period starting from the end of the ‘Shraadh’ period till the end of Diwali, we are expecting that we will have roughly a 14 per cent growth in retail sales,” he said.
As a result of that, he said the inventory levels of the dealers will come down to around 30 days by the end of this month.
“The new inquiries and the bookings have also been better than last year, not by very much, but better than last year. Therefore we look forward to a reasonable quarter where we should continue with our growth but that growth is not going to be very much different from between 3 and 4 per cent (for the overall fiscal),” Bhargava said.
New bookings crossed over 4.15 lakh at the moment. So, the order book is quite healthy, he added.
Yet, Bhargava said, “The industry is not very optimistic that there’s going to be a great upsurge in demand and the overall sales for this year is supposed to grow at between 3 and 4 per cent.”
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