DEMAND ESTIMATION AND FORECASTING MARUTI SUZUKI

BUSINESS ECONOMICS

COURSE COORDINATOR: Dr V V MADHAV

 NUMBE REGISTRATION NUMBER NAME OF THE STUDENT
R
1 2411510038 K Haritha
2 2411510048 B V Siva Krishna
3 2411510059 B Kalyan Naik
4 2411510129 G Deepthi
5 24115100129 Venkataramana

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 COMPANY PROFILE

Maruti Suzuki India Limited, formerly known as Maruti Udyog Limited, is an

Indian automobile manufacturer headquartered in New Delhi. It is a subsidiary
of the Japanese automotive manufacturer Suzuki Motor Corporation.
The Company was established in 1981. A joint venture agreement was signed
between the Government of India and Suzuki Motor Corporation (SMC), Japan
in 1982. The Company became a subsidiary of SMC in 2002. In terms of
production volume and sales, the Company is now SMC's largest subsidiary.
SMC currently holds 56.21% of its equity stake. It is a public limited company
and its shares are traded at the National Stock Exchange (NSE) and the Bombay
Stock Exchange (BSE).
Maruti Suzuki India Limited is a holding company. The Company is engaged in
the manufacture, purchase and sale of motor vehicles, components and spare
parts (automobiles). The other activities of the Company comprise facilitation of
pre-owned car sales, fleet management and car financing.

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Its geographical segments include the domestic segment, which includes sales
to customers located in India, and the overseas segment, which includes sales to
customers located outside India. The Company's product portfolio includes Alto
800, Alto K10, Wagon R, Celerio, Ritz, Swift, DZire, Ertiga, Omni, Eeco,
Gypsy, Ciaz, Fronx, Brezza, Grand Vitara, Gymni etc.
Its service offerings include Maruti Finance, True Value, Maruti Genuine Parts,
Maruti Genuine Accessories, Maruti Suzuki Auto Card and Maruti Driving
School. It has approximately five plants, located in Palam Gurgaon Road,
Gurgaon, Haryana, and at Manesar Industrial Town, Gurgaon, Haryana, with an
installed capacity of over 1.5 million vehicles per year.
Maruti Suzuki has 3,598 sales outlets across 1,861 cities in India. The Brand
Trust Report published by Trust Research Advisory, a brand analytics company,
has ranked Maruti Suzuki in the thirty-seventh position in 2013 and ninth
position in 2019 among the most trusted brands of India.

DEMAND FORECASTING/ ESTIMATION AND ITS METHODS

Demand forecasting in economics refers to the process of predicting future
consumer demand for a product or service over a specified period. This process
is essential for businesses, as it helps them make informed decisions about
production, inventory management, pricing, and market strategies.
Demand forecasting uses historical sales data, market trends, and various
economic indicators to estimate future demand levels. It can be short-term
(weeks to months), medium-term (months to years), or long-term (years ahead),
and the accuracy of forecasts directly impacts a company's operational
efficiency and financial performance.
There are two main types of demand forecasting:
Qualitative Forecasting: Based on expert opinions, market research, and
subjective judgment. Useful when historical data is limited.
Quantitative Forecasting: Uses statistical methods and mathematical models,
relying heavily on historical data to identify patterns and predict future demand
trends.

Demand estimation is any means to model how consumer behavior changes

due to changes in the price of the product, consumer income, or any other
variable that impacts demand. In practice, demand functions for a specific
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market must be estimated using empirical data. Demand estimation provides
information about the prices and respective quantities that consumers are
willing to demand. Forecasting is used to help managers reduce sunk costs and
ensure growth is accounted for. There are five key methods outlined below
which can be used to estimate demand.
There are many different ways to create forecasts. Here are five of the top
demand forecasting methods.

1. Trend Projection
Trend projection uses your past sales data to project your future sales. It is the
simplest and most straightforward demand forecasting method.
It’s important to adjust future projections to account for historical anomalies.
For example, perhaps you had a sudden spike in demand last year. However, it
happened after your product was featured on a popular television show, so it is
unlikely to repeat. Or your eCommerce site got hacked, causing your sales to
plunge. Be sure to note unusual factors in your historical data when you use the
trend projection method.
2. Market Research
Market research demand forecasting is based on data from customer surveys. It
requires time and effort to send out surveys and tabulate data, but it’s worth it.
This method can provide valuable insights you can’t get from internal sales
data.
This is done on an ongoing basis or during an intensive research period. Market
research can give you a better picture of your typical customer. Your surveys
can collect demographic data that will help you target future marketing efforts.
Market research is particularly helpful for young companies that are just getting
to know their customers.
3. Sales Force Composite
The sales force composite demand forecasting method puts your sales team in
the driver’s seat. It uses feedback from the sales group to forecast customer
demand.
This method gathers the sales division with your managers and executives. The
group meets to develop the forecast as a team.
4. Delphi Method

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The Delphi method, or Delphi technique, is one of the qualitative methods of
demand forecasting that leverages expert opinions on your market forecast. This
method requires engaging outside experts and a skilled facilitator.

DEMAND FORECAST FOR SALES OF MARUTI SUZUKI LIMITED

(2016 to 2022)
Maruti Suzuki Limited is one of India’s leading motor vehicle manufacturers
with a consistently greater market share among the vehicle manufactures in
India. The year-on-year sales (in units) has been considered for the demand
forecast analysis of the sales for the next 5 years using Trend value analysis
method for the demand estimating.

Year 2016 2017 2018 2019 2020 2021 2022

Sales (in units) 1429248 1568603 1779574 1862449 1563297 1457861 1652653

By using the Trend analysis for the above-mentioned data, the forecasted
demand is mentioned below:
The following data represents the year-on-year sales (including Indian domestic
market+ Exports) for all vehicles in Maruti Suzuki Ltd.
Based on the given data it can be observed that there is a sharp increase in the
sales from 2016 to 2019 due to the introduction of new models and
technological versions of cars. There is a sharp decline in the sales in the year
2020 due to COVID 19 pandemic and multiple lockdowns imposed by the
government.
In the year 2021, saw further decline in sales due to the second wave of Covid
19 pandemic and multiple lockdowns as well as recession in the market due to
which demand in the cars got decreased. The post covid scenario has shown
slow and study improvement as mentioned below.

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 YOY SALES (IN UNITS)
1862449
1850000
1779574
1750000
1652653
Sales (in units)

1650000
1568603 1563297
1550000
1457861
1450000 1429248

1350000

1250000

2016 2017 2018 2019 2020 2021 2022

Sales (in 1429248 1568603 1779574 1862449 1563297 1457861 1652653
units)

As per the demand forecast analysis for the years 2023 to 2027, it can infer that
there will be a steady increase in the demand for cars in the market which will
contribute to the growth of business.

Forecast Sales (in units)

1870000
1854092
1850000
1830000 1824361

1810000
1794631
Sales (in units)

1790000
1770000 1764900

1750000
1735170
1730000
1710000
2023 2024 2025 2026 2027
Sales (in units) 1735170 1764900 1794631 1824361 1854092

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 DEMAND ESTIMATION FOR SALES OF MARUTI SUZUKI LIMITED:

YoY SALES (in units)

1862449 1854092
1850000 1824361
1779574 1794631
1764900
1750000 1735170
1652653
1650000
1568603 1563297
Sales (in units)

1550000
1457861
1450000 1429248

1350000

1250000
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Sales 1429248 1568603 1779574 1862449 1563297 1457861 1652653 1735170 1764900 1794631 1824361 1854092
(in
units)

Sales (in units) Linear (Sales (in units))

The above graph depicts the overall trend analysis and demand
estimation/forecast of the annual sales from 2016 – 2027. The estimated
forecast indicates that there will be a steady increase in the overall sales in both
domestic market and exports.
Based on the above analysis, It can be concluded that Maruti Suzuki Ltd will
continue to be a leader in the market.
DEMAND FORECAST FOR SALES OF MARUTI SUZUKI LIMITED
(2023 to 2034)
Maruti Suzuki Limited is one of India’s leading motor vehicle manufacturers
with a consistently greater market share among the vehicle manufactures in
India. The year-on-year sales (in units) has been considered for the demand
forecast analysis of the sales for the next 12 years using Trend value analysis
method for the demand estimating.

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And the below table shows the future trend value analysis and demand
estimation/forecast of the annual sales for the Maruthi Suzuki Ltd:

Year 2023 2024 2025 2026 2027 2028 2029

Sales (in units) 1693144 1734628 1779574 1820669 1865277 1910978 1957799

Year 2030 20231 2032 2033 2034

Sales (in units) 2005767 2054910 2105257 2156838 2209682

By using the Trend analysis for the above-mentioned data, the forecasted
demand is mentioned below:
The following data represents the year-on-year sales (including Indian domestic
market+ Exports) for all vehicles in Maruti Suzuki Ltd.
Based on the given data the graph for first 8 years can be observed that there is
a sharp increase in the sales from 2023 to 2028.

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Based on the given data the graph for next 7 years can be observed that there is
a sharp increase in the sales from 2029 to 2034.

DEMAND ESTIMATION FOR SALES OF MARUTI SUZUKI LIMITED:

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Conclusion:
The above graph depicts the overall trend analysis and demand
estimation/forecast of the annual sales from 2023 – 2034. The estimated
forecast indicates that there will be a steady increase in the overall sales in both
domestic market and exports.
Based on the above analysis, It can be concluded that Maruti Suzuki Ltd will
continue to be a leader in the market.

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