TIME SERIES ANALYSIS OF SALES

DATA FROM MARUTI SUZUKI AND

DEMAND FORECASTING

Animesh Chandra Dutta

Table of Contents
Introduction ................................................................................................. 2
Maruti Suzuki India Ltd. ................................................................................... 2
Methods and Techniques .................................................................................. 2
Time-Series Analysis ..................................................................................... 2
Smoothening Techniques ............................................................................... 4
Moving Averages ....................................................................................... 4
Centered Moving Averages ........................................................................... 4
Analysis and Forecast ...................................................................................... 4
Conclusion ................................................................................................... 7
References .................................................................................................. 7

1
Introduction

This study is undertaken to analyze the quarterly sales data (domestic + exports + OEM sales)
of MSIL from the last 8 years, starting FY2015-16 and forecast the demand for the next 2
quarters (Q3, Q4) of FY23-24. The sales figures are taken from the official press releases
available on the MSIL website (https://www.marutisuzuki.com/corporate/media/press-
releases)
The forecasting is used by companies to determine how to allocate their budget for an upcoming
period. This is typically based on demand for the goods and services it offers, compared to the
cost of producing them. Investors utilize forecasting to determine if events affecting a
company, such as sales expectations, will increase or decrease the price of the shares in that
company. Forecasting also provides an important benchmark for firms which have a long-term
perspective of operation.

Maruti Suzuki India Ltd.

The Indian auto market was ranked the third largest globally as it overtook Japan in 2022 and
the fourth largest manufacturer of commercial vehicles in 2023. It is projected to increase by
7 – 10% in the next fiscal year. The auto industry accounts for 49% of India’s manufacturing
gross domestic product (GDP) and 7.1% of its overall GDP.

Maruti Suzuki is a leading automobile company in India. The four decades old company is a
subsidiary of Japan based Suzuki Motor Corporation (SMC) and is publicly traded on the NSE and
BSE. As per the Federation of Automobile Dealers Associations (FADA), the retail sales of
country's largest carmaker Maruti Suzuki India rose to 14,79,221 units in 2022-23 fiscal, attaining
a market share of 40.86 per cent. [source: https://economictimes.indiatimes.com/]

In this study, we’ll be analyzing the quarterly sales volume of MSIL in the last 8 years, examining
if the impact of seasonality, whether the data is best fit for trend analysis or not. Based on the
trend thus arrived at, the demand forecast for the next two quarters will be done.

Methods and Techniques

Time-Series Analysis
Time-Series analysis is one for the most frequently used forecasting methods where attempts
are made to forecast future values of the time series by examining the past observations only.
The assumption is that the time series will continue to move as in the past (i.e., the past

2
pattern will continue unchanged or will be similar in the future). However, when we plot most
economic time-series data, we discover that they fluctuate or vary over time. This variation is
usually caused by:

1. Secular Trend (T) – refers to a long-run increase or decrease in the data series. For e.g.,
many time series of sales exhibit rising trends over the years, mostly driven by population
growth, and increasing per capita income & expenditures.

2. Cyclical Fluctuations (Cyclicity, C) - major expansions and contractions in most

economic time series that seem to recur every several years, forming a business cycle. For e.g.,
the housing construction industry follows long cyclical swings lasting 15 to 20 years, while the
automobile industry seems to follow much shorter cycles.

3. Seasonal variation (Seasonality, S) – refers to the regularly recurring fluctuation in

economic activity during each year because of weather and social customs. For e.g., retail sales
in India are usually highest during the festive season (Oct – Dec), while products like ACs and
Coolers record highest sales during summer months (Apr – Jun).

4. Irregular or Random influences (R) – are the variations in the data series resulting from
wars, natural disasters, pandemics, strikes, or other unique events.
i.e., if Yi represents the Sales at time i, then it can be mathematically expressed as below:

Yi = T x C x S x R --- (multiplicative characteristic of time-series data)

For time-series analysis, it is assumed that.
Yi = f(t), t is time

Seasonal Adjustment or Deseasonalizing

If the time series exhibits regular seasonal fluctuations, it is called non-stationary. In order to
remove the seasonality and make our time-series data stationary, which is a requirement by
most forecasting models, we will perform De-seasonalizing (or Seasonal Adjustment).
Once the de-seasonalization is done, we will predict the linear and non-linear trends using
regression on this de-seasonalized data. Based on these trends, the forecasting for the next 2
quarters will be done, i.e.,
ds = f(t)
ds = f(t, t2), etc.

When the seasonality is removed, we get

Yi/S = ds = C x T x R

3
Smoothening Techniques
Different smoothening techniques are used to predict values of a time series on the basis of
some average of its past values only. It is useful when the data set exhibit little trend or
seasonal variations but a great deal of irregular or random variation. In our study, the Moving
Average smoothening technique has been used.

Moving Averages
It is the simplest smoothening technique. Here the forecast value of a time series in a given
period (month, quarter, year, etc.) is equal to the average value of the time series in a number
of previous periods. To calculate the moving average, we are taking averages of four
consecutive quarters in the observation.

Centered Moving Averages

By default, moving average values are placed at the period in which they are calculated. So,
with Centered moving averages, they are placed at the center of the range rather than the end
of it. This is done to position the moving averages at their central positions in time.

Analysis and Forecast

For the collected sales data, a Linear and Quadratic Trend analysis have been performed.

Fig1: Scatter plot for actual sales and deseasonalized sales with linear trendline.

4
Fig2: Scatter plot for deseasonalized data with linear trendline.

As we can see from Fig1 and Fig2, there is a great deal of seasonality exhibited in the data set,
with sales being at lower levels in Q1 and Q2 every year compared to those in Q3 & Q4.
Starting the FY19Q3, the sales has gone down as MSIL started working on introducing BS6-I
variants which came at the premium. The BS6-I finally got implemented by the Govt. of India
on 1st April 2020. Due to this regulatory requirement, there were additional costs incurred to
develop the relevant technologies and hence, the price hiked for all the impacted vehicles
class.
Though, MSIL was ahead of other players in the segment and better prepared to absorb the
disruptions due to BS6-I introduction, the sales took a nosedive in FY21Q1 due to Covid-19
impact. The company reported only 76,599 units of sale in that quarter. As the whole nation
went under complete lockdown, the production was shut, and markets were closed. The
company’s sales for the 1st half of FY21 was dismal and should be observed in conjunction with
Covid-19 related disruptions.
Starting FY21Q4, the sales performance was almost on the edge of getting back to pre-covid
times and finally, was back to normal in FY22Q1. However, in FY22Q2, the automotive sector
was severely hit by another disruption – acute shortage of electronic components on which they
relied heavily for their production. Because of this the quarterly sales were impacted till the
situation improved by FY22Q4. Thereafter, the sales figure has been moving up, exhibiting the
seasonality as well.

5
Fig3: Linear and Quadratic trendlines based on the De-seasonalized sales figures vs the Actual
Sales.

Fig4: Linear & Quadratic trends based on de-seasonalized sales vs deseasonalized sales.

For the collected sales data, the linear and quadratic trend analysis were performed. As the
sales figures have followed the pattern of first increase, then decrease (covid-19 & chip
shortages in FY21-FY22) and later increase, the quadratic trend is to be preferred for
forecasting. The same inference can be drawn looking at the Fig3 & Fig4 above.

6
Hence, the forecasts based on the Time-Series analysis, is as follows:

Preferred
FY Qr#
Linear Forecast Quadratic Forecast
24Q3 35 500,654.29 543,577
24Q4 36 512,965.49 564,154

Conclusion

Based on the time-series analysis of the collected sales data, the Quadratic trend is found to
be more relevant (compared to Linear). With preliminary study of the sales pattern over the 8
years timeframe, the possibility of cubic and exponential trends are ruled out. The forecasted
sales figure for FY24Q3 and FY24Q4 are 543,577 and 564,154 respectively. However, enough
caution should be observed as this study period has seen multiple disruptions (randomness) due
to Covid-19 pandemic and global shortages of electronic components.

References
1. https://www.marutisuzuki.com/corporate/media/press-releases
2. https://acarasolutions.in/outlook-of-automobile-industry-in-india-2023/
3. https://www.livemint.com/companies/news/sales-of-maruti-s-bs-6-compliant-vehicles-
touch-2-lakh-unit-mark-11570182556794.html
4. https://www.financialexpress.com/auto/industry/covid-19-how-the-indian-auto-sector-
got-impacted/2256999/
5. FACTORS AFFECTING SALES OF PASSENGER CARS – by Bhavya Chojar; retrieved from
http://www.dspace.dtu.ac.in:8080/jspui/bitstream/repository/16447/1/Bhavya_MajorResear
chProject.pdf
6. [Textbook] Managerial Economics – Principles and Worldwide Applications – by Dominick
Salvatore