The Seventh Pay Commission will boost Maruti Passenger Suzuki Vehicles Sales in Double Digit
After almost 5 years, Maruti Suzuki, India’s one of the largest carmaker has topped the market capitalization and ranked as the country’s most valuable company, even hurting Tata Motor’s JLR unit.
When comparing the market capitalization, recently, Maruti Suzuki ended at Rs. 4,180 up by 0.61 percent for a market value of Rs. 1.13 lakh crore, when compared to Tata Motors, which closed at Rs. 395.10 up by only 0.2 percent for a market value of Rs. 1.13 lakh crore (as per BSE Data). However, until June 7th, the stocks of Tata Motors performed better than the Maruti Suzuki.
Talking about the passenger vehicles, Maruti Suzuki is expected to even get a boost from the Seventh Pay Commission’s recommendations by the end of this year, which will, in a way result in an increase in salaries of government employees. Once this report is submitted and implemented by July 2016, it is likely to result in double-digit growth in the Passenger Vehicle sales by around FY 2017. As seen with the Sixth Pay Commission, where the results were tremendous growth, resulting in 10 times increase in sales of Maruti to government employees from FY08 to FY12, we are pretty confident that the upcoming Pay Commission will also result good for the company.
As per the company, Marui has sold almost 200,000 vehicles to government employees in FY 15 and this certainly increases the belief of more volume after the implementation of the Seventh Pay Commission.
As per the calculations, there are almost 30 lakh central government employees while about 3 times of this figure are the state government employees in our country. About one-fourth of them are paid around Rs.30,000-50,000 per month, adding to this, approx. 10 percent may buy cars. For those who have their own house and enough saving for their children are more likely to buy a new car and that too not just preferring the entry-level cars due to the changing preferences.