Maruti Suzuki expects to increase its profits margins by the turn June. This expectation is backed by the new launches and growing export markets. Maruti Suzuki looks more upbeat in this month than another other this year.
It is also confident of staving of confident with its new launches. The new hot hatch Ritz is expected to replicate the success of Swift Hatchback, which would further strengthen its position in the A2 segment (compact car).
The introductory prices start form Rs 3.90 Lakh for base model and the high end can be got at Rs 5 lakh onwards. The prices seem be low for now, but suggest that the company is ready take some risk initially for long term gains. The prices are similar to Hyundai i10. But Ritz is taller and more spacious, which Indian families will love. Even the fit and finish is visually pleasing, which may attract higher sales volume.
Currently,
Maruti Suzuki is the market leader with 58 percent market share. It has the seven other small car in its portfolio M800, Omni, Wagon-R, Zen A-Star, Alto and Swift hatchback. With such a strong portfolio the company was able to sell nearly 8 lakh cars in the last fiscal year. It recorded a growth of 3.6 percent. The new Ritz is expected to further increase its lead in the market.
Maruti has been able to remain buoyant during the economic slowdown, due to increase sales in rural markets and sales to government employees. These new user groups contributed almost 2 lakh units to the total tally. Due to special emphasis on government employees, their share has almost grown by three fold by 5 percent to 15 percent from fiscal year ending on 2008 to fiscal year in 2009. The rural market has reacted very favourably to Maruti Suzuki as sale in these region were more than doubled form 3.2 percent to 8 percent in fiscal year 2008-09. It is also planning to double the number of dealerships in rural regions. Maruti knows that future sales would come from rural areas.
But Maruti Suzuki has never been too pleased about the high lending rates as it adversely affected sales. Hence Indian passenger car leader wants the government to continue giving subsidies and stimulus package.
Despite the financial worries, Maruti Suzuki is happy that the input costs have decreased significantly. This helps the company improve profit margins. In the last fiscal year the companys margins posted heavy decline eventhough the net sales went up by 14 percent. The company was put to test as input costs on top end models were high due to higher imported content, an appreciating Yen and Forex hedging losses.
The company wants to set the record straight with
Ritz as it has 85 percent localization content and gets its engine that is locally manufactured. All the benefits from cost and taxes will go to lower car prices.
Maruti Suzuki is geared up to meet tough competition from rivals Tata Motors, Hyundai and Chevrolet. A new entrant Tata Nano could eat into the share of low cost cars like M800, Omni and Alto. The company is well positioned to meet the challenge as it offers low cost of ownership an unmatched network of sales and servicing outlets.
