Are high inventories a sign of problems in the Indian car market?

In this Economic situation In the podcast, host S. Ronendra Singh speaks with Partho Banerjee, Senior Executive Officer, Marketing and Sales, Maruti Suzuki India, about how the automotive industry is navigating a complex environment of inventory issues, fluctuating sales and changing consumer preferences.

Discussing the current trends in the Indian passenger vehicle market, Banerjee addresses concerns about high inventory levels at dealers and the potential impact of this dynamic with the upcoming festive season in mind: “During COVID, semiconductor shortages led to low inventory levels. Ideally, it should be 30-31 days, but during the festive season, dealers need to replenish their inventory to avoid sales loss,” Banerjee said.

With the market potentially reviving, Banerjee sheds light on Maruti Suzuki's strategic decisions, such as matching vehicle deliveries with actual demand to avoid overburdening distributors. He notes, “We are matching retail and wholesale numbers to avoid pushing too much inventory to dealers. The true market share is reflected in actual retail sales, not just deliveries.”

Banerjee shares his view on the sales trend in various segments, including the increasing demand for CNG vehicles. He stresses, “In the first quarter, we achieved sales of 427,000 units with a growth of 1.2%. 34% of these were CNG variants, which shows strong market demand.”

He also talks about Maruti Suzuki's commitment to innovation through the introduction of limited editions and an extended warranty program, saying, “We have extended the standard warranty to three years and 100,000 kilometers. With the extended warranty, customers can be assured of their money's worth for up to six years and 160,000 kilometers.”

Banerjee also discussed the company's strategy to maintain its market share in the increasingly competitive small car segment and the potential growth areas in electric and hybrid vehicles, noting: “Our CNG vehicles have a 73% market share in this segment and a third of our total sales are CNG models – a remarkable achievement.”

Listen in!

(Host: S Ronendra Singh, Producer: Siddharth Mathew Cherian.)

About the podcast “State of the Economy”

India's economy is being hailed as a bright spot amid the general gloom that seems to have gripped the rest of the world. But some sectors continue to falter while others are running at full speed. To help you understand the country's contradictions, Businessline brings you podcasts with experts from finance and marketing to technology and start-ups.