Expect more laws to boost domestic vehicle scrapping market in coming years, says Maruti Suzuki's RC Bhargava

Amid the buzz on surging inventory levels at auto dealers, Bhargava was categorical that the company's channel partners are holding about 40 days of inventory in anticipation of a surge in demand during the festival season

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26 Aug, 2025 12:21

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While acknowledging that there has not been much headway in the domestic market when it comes to scrapping obsolete vehicles, R.C. Bhargava, the chairman of the country's largest carmaker Maruti Suzuki India Ltd (MSIL), believes that implementation of stringent laws to ensure road fitness of cars will lead to greater acceleration of such activities.

“Vehicle scrapping is not happening as it should have been. One of the reasons is the absence of the mandatory requirements of vehicle fitness. World over, people scrap vehicles when it becomes uneconomical to bring old vehicles up to the standards required to pass the fitness norms. In India, we don't have that, and that is why this business of vehicle scrapping and the growth of most scrapping companies has been somewhat slow,” Bhargava said at the company's 43rd annual general meeting.

He was responding to a shareholder query on the significance of vehicle scrapping centres in the country.

ALSO READ: Low cost, small cars necessary, any demand setback won't change strategy, says Maruti's RC Bhargava

He added, “But I expect that in the coming years, we will see more laws coming in which will require vehicle fitness, which will lead to more scrapping, and when there is a market, there is always somebody who will make the supply for that market. As a result, more centres for vehicle scrappage will come up. But there has to be a supply of vehicles which people are willing to dispose of for that purpose.”

Coming to the company's plans, Bhargava reiterated that electric cars will be a priority objective for MSIL and production of the first car in the segment will commence in a few months. While reaffirming MSIL’s plans to launch six battery electric vehicles (BEVs) in the next six to seven years, he clarified that the company doesn’t intend to electrify its entire lineup of 17 models.

While expressing concern that the price of EVs is high, the company is taking steps to reduce the battery costs.

"The fact of the matter is that the battery technology is to be substantially improved for the cost to come down," noted Bhargava.  According to him, batteries account for 40 percent of the total cost of the EV. He stated, "As you know there is no battery manufacturing in India and the bulk of the batteries are coming from China."

In his view, hybrid electric vehicles are not in conflict with electric vehicles. "Hybrid cars are essentially required to reduce the pollution and the oil consumption of vehicles which are non-electric vehicles. There's a huge market out there for every single EV which can be produced and which meets with the customer requirements,” he noted.

Amid the buzz on surging inventory levels at auto dealers, Bhargava was categorical that the company's channel partners are holding about 40 days of inventory in anticipation of a surge in demand during the festival season.

"Let me assure you that Maruti's inventory with dealers is nowhere near what is being reported as two months' stock and things like that. I believe our stock in the pipeline is something around 38 days. We do have a little large stock at this time because of the upcoming festival season. I am told that by the end of this year, the stock with dealers will come down to about 10 days. So, it is nothing very special."

He clarified that dealers are “well compensated”, and the flip side of not having enough inventory is that if they don't keep adequate stocks, customers have a problem in buying the cars they want. “Then they (dealers) have to wait till cars are dispatched from the factory, and that takes time. So there has to be a good balance between what is kept as stock by the dealers and what becomes over-inventory, which doesn't move over a long period of time," said MSIL chairman.

The chairman also said the demand for small cars as well as sedans is likely to revive by March 2026. "We do expect the demand to revive. I think the nation has a need for small cars and we are waiting. Maybe by the end of 2025-26, we should have (this segment) coming back,” affirmed Bhargava.

On capacity expansion, he noted a "small delay" in finalising the site for a new facility. "Our programmes are expanding (and) production is proceeding as scheduled. Cars produced in the Kharkhoda (Haryana) plant will add to our sales in 2025-26. A small delay has taken place in finalising the site for a new 1-million-unit expansion. We are making our best efforts to come to a quick decision in this matter," he said.

MSIL is looking to take exports to one-fifth of the total output of 40 lakh units by 2030-31, or in other words, overseas shipments of 7,50,000-8,00,000 units by FY31. The passenger vehiclemaker is also strengthening its sales and service network in rural areas and is aiming for a cleaner environment and carbon neutrality, said Bhargava.