Maruti, Hyundai are not affected by demonetisation. Here’s why

Prime Minister Narendra Modi’s demonetisation move was expected to bring a drop in auto sales but the opposite has happened. Maruti Suzuki and Hyundai Motor India, the country's top two car makers, are hopeful of meeting their annual production targets.

The two auto manufacturing giants are likely to top their internal targets on the back of significant order backlog for some models.

Reportedly, production at Maruti Suzuki may touch 1.58 million to 1.6 million units by the end of the current fiscal against the internal target of 1.565 million.

RC Bhargava, chairman of Maruti Suzuki, confirmed that the company will meet its annual target by producing over 1.5 million units despite the demonetisation move, but declined to give an exact figure.

"We are doing better than others. After an initial blip in bookings in November there has been pick up in momentum of bookings. Clarity on annual numbers will emerge only by January . Continuous innovation and the ability to understand the customers' needs have helped us sustain our volume growth and market share over the years. Brand perception, ease of maintenance , spare parts' cost, distribution and sales network, all play a big part going ahead in the future,” Bhargava told ET.

The company is likely to end FY17 with a market share of over 47%, its highest in the last decade and a half.

A senior company executive said the car maker registered 30% year-on-year growth in retail in October, the highest so far for the company.

Maruti Suzuki is still sitting on inventory of close to 1 lakh units, with Vitara Brezza having a waiting period of 20-24 weeks and Baleno of about 1820 weeks.

The schedules for the next three months seem to be healthy and there will be few correction in dispatches in the final month of the calendar year. The incremental capacity is coming from the new Gujarat facility and stocking of Ignis, the launch of which is likely to bring in the incremental numbers.

Srivastava said demonetisation had a short-term impact, but the current ecosystem is geared up with strong offers from the company and support from financers to deliver good numbers. A strong product portfolio, flexibility and speed shown in terms of reacting to changing market has helped the company meet targets, he said.

"We don't change targets despite change in market condition. We believe that as market leaders, we should have the ability to deliver original set goals in spite of changing market condition by showing flexibility and speed by using the product line up. We have looked at newer segments of petrol SUV, institutional sales, shared mobility providers and deeper rural sales to offset challenges in traditional market segment,” said Srivastava.