Decline in sales of sub-Rs 10 lakh cars a concern: RC Bhargava

Decline in sales of cars priced less than Rs 10 lakh, which once accounted for 80 per cent of domestic market, due to affordability issues is a cause of concern, Maruti Suzuki India Chairman RC Bhargava said on Tuesday.

As a result of decline in sales of segment, overall growth in car market is not happening, he said, ding people need more disposable income to bring back growth in lower end of market, although company expects a 14 per cent overall retail sales growth this festive season.

"Certainly, fact is that market under Rs 10 lakh is not growing. In fact, it is declining. That is a cause of some worry because unless that lower end of market grows, re is going to be no feeders into upper market," Bhargava told reporters in an earnings conference call.

He wondered "if 80 per cent of what used to be market is not growing but is declining, how will or market continue to make up for rest of growth of market".

sub-Rs 10 lakh market at one time, in 2018-19 was 80 per cent of total market in India, he ded. In 2018-19, passenger vehicle wholesales in India stood at 33,77,436 units as per SIAM data.

sub-Rs 10 lakh segment now accounts for less than 50 per cent of overall market. In 2023-24, passenger vehicle wholesales in India touched a record high of 42,18,746 units.

"That (segment of) market is not growing at moment. That is a cause of worry. It is not overall slowdown, but it's segmentation which has happened. fact that growth is taking place only in more expensive cars, I think that doesn't make me very happy," Bhargava said.

He was responding to a query on where slowdown in domestic passenger vehicles market is a cause for concern.

Even for Maruti Suzuki India, which has been tritionally market leer in small and compact cars, growth is not coming from vehicles priced less than Rs 10 lakh.

"Growth is not coming from under Rs 10 lakh for Maruti (too). We have volumes re, but growth is not happening because of that. If we didn't grow in above Rs 10 lakh market, we would have been well below 40 per cent in our (overall industry) market share," Bhargava asserted.

When asked for reasons for decline in sub-Rs 10 lakh segment and why are people not buying cars in that category, he said, "Affordability".

On wher some incentives from government are needed to boost sales in segment, he said, "I don't know what is required, but we need people to have more disposable income."

Commenting on festive sales, Bhargava said se have been "pretty good".

"Our retail sales compared to same period starting from end of 'Shrah' period till end of Diwali, we are expecting that we will have roughly a 14 per cent growth in retail sales," he said.

As a result of that, he said inventory levels of dealers will come down to around 30 days by end of this month.

" new inquiries and bookings have also been better than last year, not by very much, but better than last year. refore, we look forward to a reasonable quarter where we should continue with our growth but that growth is not going to be very much different from between 3 and 4 per cent (for overall fiscal)," Bhargava said.

New bookings crossed over 4.15 lakh at moment. So, order book is quite healthy, he ded.

Yet, Bhargava said, “ industry is not very optimistic that re's going to be a great upsurge in demand and overall sales for this year is supposed to grow at between 3 and 4 per cent.”