Maruti Suzuki cautious about possible fall in urban demand post festive period

Maruti Suzuki has been riding positive sales sentiments post lockdown days and has managed to register a decent performance, especially in the ongoing festive period. The country's largest car maker, however, is also cautious about the prospects of sales dwindling post the festive period and as a challenging calendar year draws to an end.

Maruti Suzuki earlier this week reported a 1% rise in net profit from a year ago to ₹1,371.6 crore in the September quarter. Driving the prospects in the quarter were easing of restrictions, pent-up demand and an expected surge in demand owing to the festive period. The path beyond, however, may not be a bed of roses. "People willing to buy cars for personal mobilitiy and during the festivities may be over by December. I am not sure how much demand from urban areas will be," said MSI Chairman R C Bhargava during the course of a virtual press conference. "I don't expect strong urban demand after the festivals as people can’t afford vehicles even if they want to buy them."

What may have helped Maruti thus far is its robust presence in the small and hatchback segment. With economic uncertainties and shrinking incomes, people may have shown an increased preference for more affordable cars from well established brands with solid post-sales network.

And while many feel rural demand could maintain most of its momentum, the demand from urban centers towards the end of November may begin to dwindle.

Interestingly, the pre-owned vehicle segment has also been getting some notable traction because, say many, the need for personal mobility will remain omnipresent till the time a vaccine for Covid-19 is taken out on a mass commercial scale.

While Maruti has a strong presence in the pre-owned segment as well, the company also recently rolled out its subscription packages which negate the need for committing to a large investment of actually buying a new vehicle.