Maruti and Hyundai aim 2020 output at 70% of 2019


Mumbai: India’s top two carmakers, Maruti Suzuki and Hyundai Motor, are working on a plan to take their output this year to 70% of that in 2019, after the April-June quarter being almost a washout.

Maruti Suzuki hopes to sell 1 million units in 2020 and is even hoping to take output to as much as 90% for the financial year ending March 2021, as pent-up demand continues to drive bookings after easing of lockdown restrictions, people in the know said.

Thanks to sustained exports commitment and demand for new models like the Creta and Verna, Hyundai Motor is eyeing an output of 450,000-500,000 units for 2020, which is almost 70% of its last year’s output.

Maruti Suzuki has informed vendors to plan for 1.25-1.3 million units for the current financial year — that would be just a 16% decline from FY20. A strong recovery in rural and semi-urban areas has encouraged Maruti to share its outlook with vendors, which it did not do after the March quarter due to uncertainties from the Covid-19 outbreak.

Maruti Suzuki sold nearly 18,500 units in April-May, the first two months of the current fiscal year. This means it needs to maintain a monthly run-rate of 1.28 lakh units to reach the annual volume target shared with vendors.

More than 90% of Maruti Suzuki outlets have resumed operations and the company has managed to sustain bookings at 85% of pre-Covid levels for several weeks now.

An email sent to Maruti Suzuki did not elicit any response till press time Tuesday.

Hyundai Motor has seen strong traction due to a series of new models it launched since the beginning of 2020. The new midsize Creta SUV has received more than 37,000 bookings.

Hyundai Motor director of production Ganesh Mani S told ET that the company would aim to touch at least 70% of its previous year’s output as of now, but cautioned that the numbers might change depending on the impact of Covid-19 on future demand.

“We are operating in two shifts already and the demand for our new models has been very good in the marketplace. From the production side, we are doing all we can to cater to the demand environment under utmost care,” added Mani.

Hyundai received permission from the local authorities to continue operating its plant near Chennai, despite its adjoining areas having a complete lockdown.

In FY19, Maruti Suzuki had a monthly domestic sales run-rate of 1.40 lakh units. Incremental volume from rural areas will be quite critical to achieve its target this year in order to offset the volume contraction in metro cities.

In the last fiscal year, rural sales accounted for about 39% of the total domestic volumes.

In addition, the company may benefit from the increasing share of compact cars in bookings. Maruti Suzuki had a market share of 78.7% in the entry-level compact-car segment in FY20. In the premium compact segment, it was 57.6%.

For the current fiscal year, the Street is factoring in a volume of 85-90% of FY20. CLSA in a recent report said Maruti Suzuki and the industry would return to FY19 peak volume by FY23, which would imply a FY20-23 CAGR of 6%, in-line with the long-term trend.

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