Maruti Suzuki expects car demand to fall if COVID threat persists

The second wave of COVID-19 has wreaked havoc in India. While the central government has not put the country on a complete lockdown like they did last year, there are local lockdowns to contain the spread of the virus across India. India’s largest car manufacturer – Maruti Suzuki’s chairman RC Bhargava has said that there is no impact on the production but he shows concern for the future.

Maruti Suzuki expects car demand to fall if COVID threat persists

Despite the high risk and increase in the COVID-19 cases across India, Maruti Suzuki Chairman said that the production remains unaffected. However, the COVID-19 related lockdowns in nine states have impacted about 35% of its retail sales in India.

The manufacturer has also said that it saw the demand for its vehicles holding well in the market and even the fresh bookings continue to pour in. Bhargava revealed that Maruti Suzuki has about 2 lakh bookings in their kitty and its network stock is at sub-optimal levels. At the start of this month, the stock was nearly 32,000 units of vehicles, which has now come up to about 90,000 units. The stock comprises of various models of cars from the brand.

Concerns for future

Maruti Suzuki expects car demand to fall if COVID threat persists

Bhargava said that it is difficult to make a forecast on the demand in the coming months. The sales number remain solid at the moment with a high number of pending deliveries across the country. In an interview with TOI, Bhargava said that they are producing vehicles at full capacity and there is no shortage of labour.

He also added that the government is busy handling the pandemic situation and they cannot be burdened with the industry issues. However, he did say that if the lockdown happens in the future, it will affect the production, manufacturing and sales drastically. In an earlier interview, Bhargava said that lockdown will hurt a lot of people and the state and the central government should think twice before imposing it.

Cases in MSIL

Maruti Suzuki has a worker strength of about 30,000 personnel. Out of them, about 1,280 people have contracted COVID-19. Bhargava said that even after many people have contracted the virus and are not on their regular work schedule, it has not impacted the production. There is no impact on the production due to the unavailability of the workers in its plant.

Maruti Suzuki has also started a new production line in Suzuki’s plant in Gujarat. However, it should be noted that Maruti Suzuki has delayed the launch of the all-new Celerio in the Indian market due to the pandemic.

Rising costs

Maruti Suzuki has already announced price hikes this year. The rise in the input costs is causing the production cost to go up. The extra cost is passed onto the customers. Also, just like all the other manufacturers, Maruti Suzuki is also struggling with the semi-conductor shortfall in the market. There is a severe shortage of semiconductors in the global markets and it is affecting the production of cars. Semi-conductors are extremely vital for any vehicle and is used as crucial parts like ECU.