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It's wintry in Motown but some are still burning rubber

Sharmistha Mukherjee/New Delhi 16 Nov 12 | 12:49 AM
 Mahindra & Mahindra Ltd
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At a time when a prolonged slowdown in the domestic market has prompted automobile majors to revisit production plans and lower sales targets, a handful of models such as the Maruti Suzuki DZire, the Mahindra & Mahindra (M&M) XUV500 and Renault Duster have managed to retain consumer interest and strong demand pull.

Seven models from these three companies on Thursday together have pending orders of 180,000 units. These amount to as much as 80 per cent of the average monthly sales of 218,000 units recorded by 130-odd passenger vehicle models in the industry.

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Market leader Maruti Suzuki India Ltd (MSIL), with four winners in its portfolio, commands the lion’s shares of these bookings. With pending orders of 147,000 units, the company has orders equivalent to one and a half months of production for MSIL.

It has already delivered 20,000 units of the revamped Alto it launched on October 16 and has in its kitty another 19,000 bookings. The Swift, DZire and Ertiga have, meantime, bagged additional orders of 127,000 units, deliveries of which are now likely to stretch to the end of this financial year.

Says Mayank Pareek, chief operating officer (sales & marketing), MSIL, “We have increased production capacity for the Swift, the DZire and the Ertiga. But the demand is such that it continues to outstrip supply and, unfortunately, there is some waiting period on all three models."

These bookings have come at a time when the Society of Indian Automobile Manufacturers has cut its sales growth projections for the passenger vehicle industry to eight to 10 per cent from the 11-13 per cent forecast earlier for the current financial year.

V G Ramakrishnan, senior director (automotive practice, South Asia, West Asia and North Africa), Frost & Sullivan, says, “There are three types of growth which take place in the industry – one generated by entry-level buyers who are most susceptible to hikes in finance rates, the second by a consumer set where price elasticity does not impact demand substantially and the third by new models. While the Swift and DZire are premium cars where interest rate hikes and strong brand loyalty have not affected sales, new models Ertiga, XUV500, Quanto and Duster have opened new consumer segments by offering value-added products at affordable price points."

Further, all these models (except the Alto) have diesel variants, which have helped in converting into purchase decisions the enquiries of fuel-cost conscious buyers.

So, Mahindra, with pending orders of around 17,000 units of the XUV500 and another 6,200 bookings for the Quanto, is now doing the reverse of what many car makers in the industry are engineering in the form of production cuts.

“We have expanded capacity to roll out 5,000 units of the XUV500 every month. The demand generated by the Quanto has also necessitated that we increase production of the vehicle by 40 per cent. We will produce 3,500 units of the Quanto from the unit in Nashik by January next year," says Pravin Shah, chief executive officer (automotive division).

The Duster, with bookings of a little over 11,000 units and a waiting period stretching up to 16 weeks, has thrown the previously not-so-well-known French car maker, Renault, on the automotive map in the fiercely competitive passenger vehicle market.

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