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Maruti Suzuki Lowers their Annual Sales Growth Projection from 13% to 8%







The largest manufacturer of passenger vehicles in India, Maruti Suzuki recently lowered their sales forecast for the present year to 8% from the 13% they had projected a while ago. This will bring the sales figure to 1.18mn units for the fiscal year 2011-12, according to the company’s recent projection.

The CEO of Maruti Suzuki’s parent company, Suzuki Motor Corp., Osama Suzuki, said that because of inflation along with other issues, they took a decision to bring down their sales forecast for the current fiscal year from their earlier projection. He also said that personally, he feel a 5% rise should be about enough.

So far, Maruti has sold around 1.13mn cars, an increase of 30% in the fiscal year 2010-11. They currently have a market share of around 45%. If they assume that the segment of passenger vehicles grows at a rate of 14 to 16%, then at a projected growth rate of 8%, their market share will fall to about 42% this year.

The rising rates of interest and increasing fuel prices have impacted the growth of auto companies since the last two months. After witnessing an impressive growth of 29% in the fiscal year 2010-11, the segment of passenger cars slowed down to 7% last month, a 20 month low. Auto manufacturers managed to sell a total of 158,817 models in May, in comparison to the 148,425 models sold in the same period a year ago.

Maruti Suzuki posted a growth of 4% in domestic sales, selling a total 93,519 units. However its volume driver compact car category posted a drop of 3% in sales impacted by hike in interest rates and fuel prices. A Sr. Executive from the company was quoted as saying that the increase in petrol prices coupled with hike in interest rates has caused consumers to change their preferences, especially in the entry level segment.

SIAM also revised their annual growth forecast for the passenger vehicle category to 14-16% from the earlier 16-18%. It also added that their forecast is tentative and change, if the current situation in the market does not get any better. Car manufacturers also agree with this. Early in the month, Maruti Suzuki said that even this looks unachievable. He sales of passenger vehicles have risen by 11% in the last two months.

To meet the set target, the growth will need to be more than 18% throughout remaining year, which officials have noted is a difficult feat. The shares of Maruti Suzuki closed at INR 1099.8 per share, a decrease of 1.7% on the BSE.

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