Maruti Suzuki Fears From Ride Sharing Facility by Uber, Ola

Maruti Suzuki recently blamed the worsening traffic and ride-sharing services for its degrading sales performance in the metro cities.

R S Kalsi, senior executive director (sales & marketing), Maruti Suzuki India (MSIL), said “Metro markets are under pressure. In terms of growth also, there are concerns”. “There are various reasons. One can be traffic congestion. Other could be the impact of shared mobility.”

This fiscal year, the rate of sales growth in small cars slowed down to 2-3% in urban areas, sensed the global leader. And in the same period, there is a growth of 12% in Rural markets.

Until October 2018, Maruti Suzuki’s national sales increased by 9.9% to 1.1 million units.

Kalsi, who heads the sales function at India’s biggest carmaker said “It is not that they are declining but rural markets are outpacing growth in urban markets…If traffic management improves and customers enjoy driving on the road, certainly that will lead to a better situation…create better market (demand)”.

He was talking about the sidelines of the launch of the new Maruti Ertiga which costs between Rs 7.4-10.9 lakh (ex-showroom, Delhi). The new Ertiga will compete against Mahindra Marazzo and Honda BR-V which costs between Rs 9.5-13.9 lakh.

Maruti Suzuki said that they want to set a target of expanding the rate of growth to double digits this financial year and even the festive-season was not up to the expectations i.e. the growth was of 6%. As there are many challenges like an increase in interest rates, insurance costs and fuel prices, Maruti Suzuki said that the second half of the year ‘looks difficult’.

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Kalsi said “It all depends on how the macro-economic factors shape up. Our effort will be to try and meet our target…Interest rates have hardened, and insurance costs have increased at about Rs 9,000 per vehicle. In some areas, monsoons have been deficient and at others surplus, doing damage at both places. Stock markets are not doing so well”.