Auto industry struggles: Maruti Suzuki chairman speaks out
【Summary】Maruti Suzuki chairman R C Bhargava believes that the auto industry in India is not performing well. While October saw record sales, Bhargava emphasizes that slow growth in the lower-end car market is hindering overall growth. He suggests that it may take a few years for affordability to improve and for people's incomes to rise. Bhargava also notes that long-term growth cannot solely rely on SUVs and that all segments of the market need to grow for sustained growth.
October may have been touted as the "highest ever" month for the car industry in terms of sales, but it's important to consider the context. India is a growing market, which means that every month has the potential to set new records. However, the growth in the industry is slow, and if the lower end of the market, specifically the entry-level and lower-priced cars, does not see growth, it will hinder overall progress in the car segment. It is crucial for these segments to grow because they cater to individuals who are transitioning from two-wheelers or second-hand cars to new vehicles. Without their growth, it may take several years for the affordability factor to improve, as people's incomes increase at a slower rate than car prices.
While SUVs have gained popularity in recent years, they cannot be solely relied upon for long-term growth. The question arises: where is the customer base that will transition to the Rs 15-20 lakh range of cars? It is unrealistic to expect individuals to suddenly jump from a two-wheeler to a car in this price range. Instead, a stepwise growth approach is necessary, where all segments of the market experience growth. Only when all segments are growing can we expect to see a 10% growth across the industry.
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