Maruti Suzuki says car demand not impacted by interest rate hikes

Hike in interest rates has not yet impacted demand for vehicles but the real picture will emerge once the semiconductor shortage issue is addressed and production gets normalised, a senior Maruti Suzuki India official told PTI. With the launch of new products such as Grand Vitara and Brezza, the company's pending orders have gone up to 3.87 lakh units, from around 2.8 lakh in the last quarter, the company's Senior Executive Officer - Marketing & Sales - Shashank Srivastava, said.

Responding to a question about whether the interest rate hike has impacted demand for cars, Srivastava said, “it should have a negative impact because interest rates going up have an impact on discretionary spending, which also includes spending on cars...but at the moment that we are not feeling that".

The Reserve Bank of India (RBI), earlier this month, had raised the key interest rate by 50 basis points, making it the third consecutive increase since May, bringing interest rate to the pre-pandemic level. Citing reason for the fact that the interest rate hike is not impacting demand, Srivastava said that it was due to the supply chain disruption during the pandemic and semiconductor shortage issues production was impacted and the pent up demand could not be met.

As far as the semiconductor supply issue is concerned, he said it has improved a lot but still there are constraints that have prevented the company from running its production capacity at 100 per cent and it is difficult to give a timeline when it will be fully normalised. "We do not have a visibility going forward of the exact availability of chips," Srivastava added.

In the May-July period this year, the company produced 95 per cent of its overall capacity, up from the lowest of 40 per cent in September last year, he said.