Maruti Suzuki Chairman RC Bhargava: 'No major price increase in 2024; semiconductor situation is now much favourable'

Maruti Suzuki Chairman RC Bhargava on Thursday said there won't be any price increase for small cars and only a small hike for other cars in 2024. "We have said we are making a very nominal price increase this month. I don't think there will be any price increase for small cars," Bhargava said while speaking to Business Today TV's Managing Editor Siddharth Zarabi. "The hike for even other cars won't be significant. I don't think we need a large increase in prices at all," the veteran entrepreneur said when asked about product pricing in 2024.

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Post-COVID, the automakers increased the prices of cars due to cost pressures driven by inflation and commodity prices. When asked about his views on cost pressures this year, Bhargava said he does not see much of a price pressure this year. 

"The problem of the lower output because of component shortages...I mean, the semiconductors, I don't think it is going to come in 2024. And I believe in that 2024, we will be able to produce without any issue on the component supply side," he said, adding that he does not see so far anything happening that will increase raw material prices substantially.

In November last year, Maruti Suzuki said it had planned to increase the prices of its cars in January 2024 "on account of increased cost pressure driven by overall inflation and increased commodity prices".

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Speaking on the future of small cars in India, the Maruti chairman said that the country has 150 million or more two-wheeler owners and that cannot last forever, especially as the quality of life improves. "It has to change, and therefore the small car markets have to be there to meet the demand of scooter owners."

Bhargava said the downturn in small cars has happened because proportionately the price of small cars went much faster than the price of bigger cars. He said this happened because the cost of meeting BS6 norms and emissions is roughly the same for bigger and smaller cars. "With incomes rising, maybe in another two years from today, the affordability of cars will again become something which the lower income people can manage and the small car market will start reviving by the end of 2025 or maybe in 2026."  

On the long waiting list for Maruti cars, the company chairman said there should not be any waiting list and "it is going down substantially". He said the waiting list was due to two factors, semiconductor situation and lesser capacity utilisation for the demand of bigger cars. "We have over the years been able to adjust our production capacities. Today, our production capabilities are much more in line with what the market demand is."

The component shortages, he added, are also getting sorted out partly because the semiconductor business is now much favourable. He said the demand for CNG cars went much faster and the component manufacturers were unable to meet the demand. "So a large part of the waiting list was for CNG cars. All of this has become much better in 2024."