Maruti Suzuki Makes Market Shift Into Top Gear
Sagar Lele / 02 Jul 2012
Maruti Suzuki on Friday closed at Rs 1,169.75, rising by 4.58 per cent on the news of a cut in petrol prices. The market is hoping for an increased demand in petrol cars as this is directly linked to fuel prices. The automobile companies are soon going to post their sales volume figures for June 2012. Most companies in the sector are expected to display figures that are moderate and growth in volumes should be in single digits.
However, for Maruti Suzuki, sales volume growth is expected to be better for the month of June 2012. In June 2011, the production of Maruti Suzuki was hindered by a strike by employees in the company’s Manesar plant. Due to the strike, production was halted for about ten and a half days. Moreover, the plant was shut down for another week at the end of the month for its planned maintenance. During this time, the company’s Gurgaon plant too was also halted for maintenance.
Though it is true that the company halted production for a week in June this year as well, on account of annual maintenance and to avoid an inventory pile up, the gravity of the situation was larger in the previous year. In June 2011, the company sold a total of 80,298 vehicles which was a decline of 8.8 per cent over the corresponding month in the previous year. The domestic sales were down by 3.8 per cent while exports were down by 32.7 per cent.
In April 2012, Maruti’s sales volumes grew by 3.40 per cent as compared to April 2011 and in May 2012 they declined by 5 per cent. Considering these disappointing numbers and a lower base for June 2011, the figures for June 2012 are bound to be pleasing. It would be interesting to see how the market reacts on perceiving the month’s figures. Like Friday's rally, we expect another brief uptrend on the news coming out.
According to media reports today, Maruti Suzuki is also developing a two cylinder 800 cc diesel engine which is expected to be launched in the market in the next 6 to 12 months. This is expected to stir up the small car segment on the basis of high fuel efficiency and the fact that it would run on diesel. Maruti today opened a little more than 1 per cent higher on the back of this news.
Volume Growth for April and May 2012
Jun-12 Jun-11 % Change May-12 May-11 % Change Apr-12 Apr-11 % Change Maruti Suzuki 80,298 98,884 1,04,073 -5 1,00,415 97,155 3.4
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