According to a senior official, the hike in interest rates has not yet affected demand for cars, but the real picture will emerge once the semiconductor shortage is resolved and production normalizes. Maruti Suzuki India.
With the launch of new products like Grand Vitara and Brezza boosting bookings, the company’s backlog rose to 3.87 lakh units from around 2.8 lakh last quarter, Maruti Suzuki India Ltd (MSIL) Senior Executive Director Marketing & Sales Shashank Srivastava said.
“Theoretically speaking, it should have a negative impact because interest rates that are rising (affect) discretionary spending, which also includes spending on cars … but at the moment we’re not feeling that,” he said during the call.
He was responding to a query about whether interest rate increase affected the demand for cars.
Earlier this month, Reserve Bank of India (RBI) raised the key interest rate by 50 basis points. It was the third consecutive hike since May, bringing the interest rate back to pre-pandemic levels.
Srivastava gave the reason interest rate increase The lack of impact on demand was that due to supply chain disruptions during the pandemic and semiconductor shortage issues, production suffered and pent-up demand could not be met.
“…when you have a big production, you will know the real demand pattern… We have not been able to produce according to the basic demand pattern,” he added.
As for semiconductor supplies, he said they have improved significantly, but there are still constraints that prevent the company from running its production capacity at 100 percent, and it is difficult to say when it will be fully normalized. .
“We don’t have accurate information about the availability of chips in the future,” Srivastava said.
Between May and July this year, the company produced 95 percent of its total capacity, compared to a low of 40 percent in September last year, he said.
“When it becomes 100 percent, we don’t know. Visibility of the future availability of semiconductors is actually limited. We continue to get updates every week and we continue to change our estimate, but I can tell you one thing that we will not see 100 percent normalization this quarter,” Srvastava said.
MSIL’s manufacturing capacity at its Gurgaon and Manesar plants in Haryana is around 15 lakh units per annum. Suzuki Motor Gujarat, which supplies vehicles exclusively to MSIL, has an additional installed production capacity of 7.5 lakh units per annum.
Srivastava said the company’s new Grand Vitara SUV has received 40,000 orders so far and deliveries will begin in September.
He further said that the new Brezza has received about 90,000 orders, of which about 70,000 are pending. Maruti Suzuki is trying to increase production of the model to more than 10,000 units per month, which was last year.
“There is also a waiting period for the new Ertiga, XL6 and Baleno,” he said, adding that around 38,000 units are expected for the Baleno.
On overall industry growth, Srivastava said the automobile sector is expecting record sales this fiscal year.
“At the beginning of the year, the industry forecast was about 3.46 million to 3.52 million units. The industry consensus seems to be that it will be revised to 3.6 million to 3.7 million units, which would be an all-time high. the highest at 3.37 million units in 2018-19,” he said.
(Only the headline and image for this report may have been edited by Business Standard staff; the rest of the content is generated automatically from the syndicated feed.)
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