Maruti expects 11 pc decline in fiscal 2012 sales

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Maruti Suzuki India expects its sales to dip by 11 per cent this fiscal due to production losses suffered during the year following repeated incidents of labour unrest at its Manesar plant.

The company, which is mulling over the establishment of a new diesel engine manufacturing plant, said it will take a final decision on the proposal after the Budget.

"In the April-December period this fiscal, we were down 16 per cent from the year-ago period. In January, it has narrowed to 14 per cent. For the whole fiscal, we think our sales will be down by 11 per cent from the last fiscal," Maruti Suzuki India managing executive officer (Marketing and Sales) Mayank Pareek told reporters here.

In the 2010-11 fiscal, the company sold 13.2 lakh units. In the April-January period this fiscal, the firm sold 8,88,794 units.

"This ongoing fiscal has been a really trying year for us... We had lost about 1,06,000 units, which is almost about a month's production, due to the strikes at the Manesar plant," Pareek said.

He was speaking at the launch of the shorter version of the company's entry-level DZire sedan at an introductory price between Rs 4.79 lakh and Rs 7.09 lakh (ex-showroom, Delhi).

"We cannot match what we did in 12 months last fiscal in 11 months of this fiscal," he added.

In 2011, MSI was hit by a labour unrest at the Manesar plant. The first incident erupted in June, which was followed by similar imbroglio in August that lasted till October 1.

A third standoff between the plant management and workers occurred in October. The total number of days affected by the labour unrest was 60.

Pareek said although the company has been able to register positive sales in January after seven continuous months of decline, the fundamental weakness in the market still remained.

"Demand for petrol cars still continues to be weak, while those of diesel are still very high. For us, in January, demand for diesel cars increased by 34 per cent while on the other hand, petrol declined by 6 per cent," he added.

With supply of diesel engines from Fiat coming in, Pareek said MSI should be able to sell more diesel cars.

MSI recently signed an agreement with Fiat India to source 1,00,000 units of diesel engines a year from the latter's Ranjangaon facility.

When asked about MSI's plans to enhance its own diesel engine capacity by setting up a new plant, Pareek said: "A final decision will be taken after the Budget."

The auto industry fears that the government may impose additional tax on diesel cars as opposition to 'subsidised fuel being used for luxury' gets stronger.

Commenting on the new DZire, Pareek said: "The company and its vendors have invested over Rs 230 crore for the new DZire. The new model will be cheaper by Rs 25,000-Rs 30,000 than the older version."

The new model is available in both petrol and diesel options and qualifies for the excise duty of 10 per cent enjoyed by small cars as it is shorter than 4 metres.

While the petrol version will be powered by a 1.2-litre engine, the diesel one will have a 1.3 litre engine. An automatic transmission variant will also be available in the petrol version.

The company has priced the petrol variants of the new DZire between Rs 4.79 lakh and Rs 6.54 lakh, while the diesel ones will come for Rs 5.80 lakh-Rs 7.09 lakh.

The prices of the existing DZire range between Rs 5.05 lakh and Rs 7.40 lakh (ex-showroom Delhi).

The new DZire has at least 150 new features compared to the existing one. The company, however, will continue to produce the old DZire in some specific variants, like the base model in a stripped down version to target the fleet segment.

The new sedan will be produced at MSI's Manesar plant. The current DZire has a waiting period of 3-4 months with around 30,000 pending orders and MSI is looking to address the issue by gradually ramping up output.

Pareek said customers who booked for the old Dzire have been offered to convert to the new one.

Since its launch in 2008, MSI has sold over 3.2 lakh units of DZire so far. The existing model did not enjoy the excise benefit on small cars as it is longer than four metres.

As per the current government policy, cars shorter than 4 metres and with an engine capacity of 1,200-cc of petrol or 1,500-cc of diesel qualify as small cars.

Those bigger than the specifications come under the big car category and attract excise duty of 22 per cent with an additional fixed duty of Rs 15,000.