A bleak outlook projected by India’s largest carmaker has set alarm bells ringing in the country’s automotive sector this year.
Maruti Suzuki, which sells every second car in the Indian market, issued its weakest growth forecast in the past five years, citing falling demand and its move to stop production of diesel cars to comply with tougher emission norms.
The Suzuki-owned company has said it expects production and sales to grow between 4% and 8% for the financial year starting in April. Last year, the company targeted 10% sales growth, but later revised it to 8%.
The company attributed the tepid growth forecast mainly to a downturn in the market, which, it says, will take time to improve. It admitted that the country’s overall car market had been affected due to a slowdown in both the rural and urban markets.
Maruti Suzuki also confirmed that all its diesel cars will be phased out by next April. The company said that as the Bharat Stage 6 emission norms kick in from April 2020, it would focus on upgrading its petrol engine line-up.
For the fourth quarter ended March 31, the company reported a 4.6% fall in net profit to 17.95 billion rupees. In addition to falling demand, this quarter the company had to contend with adverse foreign exchange rates, high commodity prices and higher sales promotion expenses.