Maruti is expecting double-digit growth in FY16: Bhargava

Maruti Suzuki Chairman R C Bhargava is upbeat that his company will continue to register double-digit sales growth in 2015-16, despite a rise in fuel prices, monsoon concerns and increasing competition for entry-segment cars.

"Maruti expects double-digit growth this year. We saw a good increase in April. There is no serious worry about sales," Bhargava told Business Standard.

India's largest car manufacturer recorded domestic sales growth of 27 per cent in April. It sold 100,709 units, compared with 79,119 in the same month a year earlier.

The octogenarian chairman said the company was going to close May with double-digit growth as well. The sales numbers for the month will be announced on Monday.

He, however, cautioned there could be cut-throat competition in the entry segment, because of a rise in fuel prices, more options in the market, and monsoon concerns. In March-April of the current calendar year, unseasonal rains and hail hit farmers waiting to harvest their rabi crop.

"In India, the monsoon will always be cyclical. There was not much impact on April sales in rural areas," he said.

The company, which has a 46 per cent share of the domestic market, gets almost two-thirds of its car sales from urban centres, while small towns and rural areas account for the rest. Most of the company's volumes come from cars like Alto, WagonR, Swift and DZire. Its closest rival is Hyundai Motors. A good monsoon is a factor that often leads to two-wheeler owners in rural areas buying cars.

A rise in fuel prices also affected sales figures in May. "There was an impact on entry-level cars due to an increase in petrol prices," the chairman said. Petrol prices rose 10.7 per cent in the month, as oil marketing firms decided to pass on the impact of a depreciating rupee (versus the dollar) to consumers, and international prices also firmed. Petrol now costs Rs 66.29 a litre in Delhi.

Bhargava said his company had changed its marketing strategy to target buyers of premium cars. Speaking for the first time about Nexa, Maruti's yet-to-be-launched premium dealerships, he said there was a segment of customers seeking an experience different from what they got with entry-level cars.

Though Nexa will initially be launched only in cities, Maruti plans to later roll out these dealerships across India.

"We cannot do it overnight. We don't try to bite more than what we can chew. We will do it in a manner that things are stable," he said.

These new showrooms will stock the company's premium offerings and address the space problem, which current dealerships face in adequately displaying the entire range of Maruti cars.

"Maruti had only 10 models until three years ago. This year, we will have 15. The number of models will keep rising. A showroom has to exhibit all models but the current ones do not have enough space," said Bhargava.

"We will have two sets of channels. The first will deal with the budget-oriented customer who is more conscious about cost and value, while the second will meet the expectations of those wanting a red-carpet treatment," he added.

Though Nexa is likely to be officially launched in July, a soft launch has already been done, with a new store coming up in Delhi's Dwarka. This store stocks only the Ciaz, the car that is helping Maruti establish itself in the premium sedan market.