Aims to have a presence in one lakh villages by March next

As low consumer sentiment due to high fuel prices and interest rates has dampened hopes of a turnaround for the struggling auto industry, Maruti Suzuki India's Chairman R C Bhargava, on Tuesday, said an economic revival was needed to help the sector drive back to the growth track.

“As far as industry is concerned there are no signals of revival… nothing that has happened has given us hope that we will see any significant change as a whole this year. Market situation is depressed,” Mr. Bhargava said. He, however, expressed hope that the government that would be formed after the general elections next year would take steps to revive the economy.

Car sales have declined continuously for the first nine months of the year as high ownership costs in a slowing economy have prompted consumers to postpone purchases.

Country’s largest car maker is driving into rural markets to boost sales and aims to have presence in a total of one lakh villages across the country by next March .

“The industry has seen a decline in sales by about 4-5 per cent this year. On the other hand, our rural sales—which accounts for about 30 per cent of our total sales—have grown by 18 per cent in the April-November period this fiscal,” he said. The Maruti chief also said that had it not been for the rural market, the company would have had an even tougher time and “we would have been in similar mess like the rest of the industry” as demand in urban areas has slowed down by 5-6 per cent.

“We have been giving emphasis on rural markets. Last year, we had covered 44,000 villages and till November this year, we have presence in 60,000 villages and by March next year, we will have presence in one lakh out of a total of 6.51 lakh villages in India,” he added.

Elaborating on the reasons for declining sales in urban market, Mr. Bhargava said, “One reason is job creation level has declined… it is nearly half of what is used to be because of the slowdown. Second and probably the more important reason is that cost of maintaining a car has gone up as the fuel prices have increased and interest rates too have gone up.”

He added, “Only answer for declining sales is economic revival…only then will jobs be created and people will have money to maintain a car.” Further he said, “We don't expect anything to happen between now and the elections. We are hopeful that the new government, which ever it might be, will bring something positive for the industry.

On future expansion, particularly the Gujarat plant, he said the project is currently “in cold storage” at the moment. “There is no point in creating additional capacity when there is no demand. We have the land, boundary wall has been erected but we are not undertaking any capacity creation,” Mr. Bhargava said.

Maruti said exports during the current fiscal are likely to come below projections. It had earlier projected exports at 1.2 lakh units.

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