Expect Downward Transfer of Demand: Maruti Suzuki ED Shashank Srivastava

Expect Downward Transfer of Demand: Maruti Suzuki ED Shashank Srivastava

Anticipating Downward Transfer of Demand: Maruti Suzuki Executive Director Shash
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The company has opened more than 1,800 of its dealerships across the country and sold 7,000 cars so far


The Indian automotive industry has been literally battered by COVID-19 – the pandemic had put production activities in standstill mode for close to two months, following the nation-wide lockdown imposed by the government. And now as the country’s auto industry resumes operations albeit in a staggered manner, there is a great deal of talk whether car-buying would walk down a ‘new normal’ path in coming months. The country is well into its third month after the pandemic had reared its ugly head in March (it had originated in China in December 2019) and the biggest talking point is whether they would be any shift in customer preferences going forward amidst COVID-19.

Shashank Srivastava, Executive Director (Marketing & Sales), Maruti Suzuki, believes that there won’t be any evaporation of demand across segments, but only a shift in demand downwards. “I’m anticipating a downward transfer of demand and not any demand contraction across segments. If any customer had made up his mind to buy a Mercedes, he may now opt for an Audi; similarly, if any customer wanted to buy an Audi, he may desire to purchase an Elantra or something else and so on and so forth,” he said.

The outbreak of COVID-19 is poised to create more demand for small, entry-level cars. “There will be a strong consumer preference for private transportation over public transportation in this COVID-19 situation, which means demand for smaller cars will go up. Our various consumer research and consumer interactions as well as initial enquiry data reveal that consumers are looking for smaller cars,” Srivastava pointed out.

According to the senior Maruti Suzuki India official, car buying will become more of a functional need in coming times. “Car buying will become a functional need (for transportation to be fulfilled) and such a scenario will trigger many first time buyers. Further, when car buying becomes a functional need, the percentage of used cars sold also goes up. However, I don’t see consumers upgrading their vehicles in coming months, and if any consumer had harboured any such ambitions earlier he may defer it by one or two years,” Srivastava noted.

Srivastava accentuated the importance of positive sentiments for vehicle demand to happen. “Car buying is a discretionary purchase that requires positive sentiments. Of course, amidst COVID-19 sentiments are suppressed. A lot of the auto industry’s progress will depend how quickly sentiments turn positive. You never many factors can come into play – for example, a COVID-19 vaccine is found, positive cases fall drastically and the government comes up with a big stimulus; all these can lift consumer sentiments. But it is difficult to predict over the short-term. The economy has to grow as there is a strong co-relation between GDP growth and car sales. We need the economy to recover for long-term car demand to recover,” he observed.

Amidst the COVID-19 gloom and doom, the Maruti Suzuki India Executive Director sounded positive about the future. “Look, the whole wheel of retail has started moving - we have opened more than 1,800 of our dealerships across the country and sold 7,000 cars so far. Cash has started flowing in and dealerships have manpower back though with restrictions. Further, consumers have started taking delivery and bookings have started. All these only augur well for the future,” he exuded hope.

The company is focussing a lot on the network expansion front and is keen to expand its geographical spread. “Our rural penetration has gone up substantially over the years – our car sales in rural pockets was around 7-8 % about 9-10 years back but now it is at 39 %. The enhanced rural penetration has been possible owing to prosperity and income levels going up in these areas. Our focus is not just on volumes, but also on expanding our consumer base,” he concluded.

 

Suhrid Barua
Author: Suhrid Barua
Suhrid has a predilection for anything concerning the auto industry and at Auto Tech Review he gives vent to this passion – he has a special liking for commercial vehicles and electric vehicle ecosystem. Suhrid tweets @ProsJunoon