Maruti Suzuki BSIV inventory level is negligible; We are engaged in the production of BSVI vehicles: Shashank Srivastava, Executive Director

Shashank Srivastava, Executive Director, Maruti Suzuki, talks about coronavirus and its impact on the industry as well as Maruti Suzuki, sales and exports, BSVI vehicles and new launches among others during an interview with Swati Khandelwal

Shashank Srivastava, Executive Director, Maruti Suzuki, talks about coronavirus and its impact on the industry as well as Maruti Suzuki

Shashank Srivastava, Executive Director, Maruti Suzuki, talks about coronavirus and its impact on the industry as well as Maruti Suzuki, sales and exports, BSVI vehicles and new launches among others during an interview with Swati Khandelwal, Zee Business.

Edited Excerpts:

Q: Will the severeness of corona-virus in China will impact the supply chain of the industry as well as Maruti Suzuki?

TRENDING NOW

A: There has been no impact on our company until now. We take the components from tier-I suppliers, while some of the tier-II suppliers, who are based in China, supply certain components to tier-I suppliers. However, people who are involved in our supply chain are keeping a close tab on it as it can have an impact if it continues for a long time. As of now, there has been no impact on production or in the supply of vehicles.

Q: How your exports are getting impacted due to the global outbreak of coronavirus spreading in more than 70 nations now?

A: Our exports grew by 7-8% in February. Actually, the ordering cycle of export is a bit larger if compared to the domestic. The domestic cycle is hardly for 15-20 days whereas, the export ordering cycle goes for 3-4 months. So, its impact on export can be seen after a few days or months.

Q: With a virus case being detected in Delhi and other parts of India, how is your company preparing to combat it at the company level?

A: First of all, we are ensuring that there should be no effect on production and supply. And, I have already said that it hadn't had any impact till date on us. Secondly, its impact on India has not been too vital and as far as consumers who are visiting dealers are concerned then it didn't have any impact on our retail business in February and it grew by 12-14% when compared to the retail business of January. We hope that the retail will be normal even in March. However, we will have to wait and watch that the virus doesn't increase its spread in India but we will have to take action/steps if there is an increase in it to normalize the situation.

Q: Total February sales and domestic sales have been slightly lower than street estimates, however, exports have been higher side. Can you tell us about the region that contributed the most to the growth and do you think that the trend will continue in future as well?

A: If you have a look on the entire year's performance of the auto industry than you will find a drastic fall of around 17-18% in the auto industry in the first half of the year (H1FY20) and same was the situation of Maruti. But, the third quarter (October-December) has been a good quarter for Maruti although it remained negative for the industry. January was positive for Maruti but negative for the industry. It was slightly negative for both in February. So, the situations have improved a bit and it has moved into the positive territory after September 2019, however, industry's growth continues to be in the negative territory. And, this is a reason that Maruti's market share has increased a lot in the last 4-5 months.

Q: Update us about the rural demand sentiment and do you see the rural demand is picking as it has 40% contribution to Maruti's volume growth?

A: Rural demand has seen positive growth in the last 3-4 months and if you have a look on the data of these months then you will find that there is a just 10% difference between the rural and urban demand growth. Rural demand is almost 10% higher than the urban demand. The difference was created because there is a slight improvement in rural sentiment due to good monsoon and record Rabi crop production. This improvement in the sentiments is also visible in car sales.

As far as the share of sales of the two market is concerned then more than 40% of vehicles were sold in rural areas. Rural sales trend has increased from 9% to 40% in the last 10 years, which is a good sign for rural areas. It also indicates that there is an increase in rural incomes, which will lead to an increase in rural demand.

Q: What is your inventory level currently and do you see pre-buying happening in Q4FY20 before BSVI becomes effective from April 1? Have you successfully converted all your vehicles into BSVI?

A: Different situations are being faced by different manufacturers. Maruti has stopped BSIV production and is completely engaged in the production of BSVI vehicles. Our BSIV stocks are very limited, maybe around 2,000 units or less than it. This means, if Maruti Suzuki retails around 4,500 units in a day then it has a half-day stock and we can say that we don't have any problem and there is no fire sales or pre-buying, at least in the case of Maruti because we just have BSVI vehicles in our gamut of products. But there are chances that there are some manufacturers whose BSIV stocks are quite high and they would try to clear it by March 31, 2020, maybe by creating a fire sale condition but it doesn't imply on Maruti Suzuki.

Watch Zee Business live TV below:

Q: To entice the customers, what is your pipeline of new product portfolio for FY21?

A: I can't speak about the product plan of the future but can say that Maruti Suzuki has an aggressive product portfolio. In the recent past, we have launched several vehicles like S-Presso in September; XL6 in October, an SUV-type vehicle, which is an MPV derivative; Brezza with a 1.5-litre smart hybrid petrol engine at Auto Expo 2020 and then Ignis. Similarly, the petrol-variant of S-Cross will be launched soon. Thus, we have launched 5 different vehicles in the last 5 months and we will continue to be aggressive in future as well.

TAGS:

Maruti Suzuki