Lower affordability hits demand for cars: Maruti Suzuki

New Delhi: The country's biggest carmaker Maruti Suzuki said on Tuesday that high prices of vehicles are impacting demand, with a crushing effect on the big volume sub-Rs 10 lakh category.

Maruti chairman RC Bhargava said while small cars continue to wait for a revival, other categories reel under high prices. " Affordability of cars is a concern," he said when asked why the car sales have slowed down this year after witnessing bumper numbers over the past two years.

The company reported an 18% fall in consolidated net profit to Rs 3,102 crore for the quarter ended Sept as against Rs 3,786 crore a year ago, mainly on account of higher provisioning, following the withdrawal of indexation benefit and changes in the long-term capital gains taxation in the Budget.

Its expenses on marketing and discounts also impacted profit. Revenue from operations stayed flat Rs 37,449 crore during the second quarter of the current financial year, as against Rs 37,339 crore in the year-ago period.

Bhargava said the company has cut down on wholesales to align its inventory levels to retail demand. "Overall, it is at healthy levels and I do not see much pressure for discounting as we move from here."

Partho Banerjee, senior executive officer for sales & marketing, said while being subdued earlier, demand has returned in the festive period. "We hope to reach record Oct sales at nearly two lakh customer deliveries. The previous highest in Oct was in 2020-21, when we retailed 1.9 lakh units."

Bhargava said slowdown in first two quarters will mean that car industry will finish this year with a growth of 3-4% for full year. Asked how long he expected the current sentiments to persist, the industry veteran said, "The sub-Rs 10 lakh segment is showing a declining trend. Nothing is changing in a short period of time."

So, will a reduction in GST will fuel demand? "We don't know what is required to be done. We need people with more disposable incomes," he said.