Maruti Suzuki, the country’s largest car maker, reported a 47.5% jump in third-quarter profit after it sold more cars in the higher-end segment and benefitted from lower sales promotion and marketing expenses.
Net profit for the three months ended December 2016 rose to ₹1,744.5 crore from ₹1,183 crore in the same period last year. Maruti sold 387,251 vehicles during the quarter, of which exports accounted for 30,748 units. Sales rose 3.5%.
Maruti’s total income from operations rose 13.1% to ₹19,173.1 crore, from ₹16,957.6 crore in the year-earlier period.
“Increase in share of the company’s higher segment models, lower sales promotion and marketing expense, cost reduction efforts and higher non-operating income contributed to increase in profits,” the Gurugram-based firm said in a statement.
It, however, added that this was partially offset by the increase in commodity prices and adverse foreign exchange movement during the quarter.
For the nine-month period from April to December, Maruti sold a total of 1,154,164 vehicles, a growth of 8%. Of this, exports stood at 92,291 units. Net profit rose 44.8% for the period to ₹5,628.7 crore.
“Their recent models have done well,” said Abdul Majeed, Partner at PwC. “Since these models have a high waiting period, they were not impacted by demonetisation,” he said.
Nexa effect
Mr. Majeed said that the company’s strategy of using Nexa as a channel for distribution of premium cars had also paid off. “Nexa has helped them push sales of their premium vehicles, which they were not able to sell earlier,” he said.
Automobile demand was hit hard in the wake of the withdrawal of high-value currency notes, with total sales of cars, two-wheelers and commercial vehicles shrinking 18.7% in December — the steepest such drop since December 2000.
Industrywide sales
Domestic car sales fell 8.14% industrywide, the most since April 2014, while sales of utility vehicles rose 29%.
However, industry body SIAM termed the dip as a “temporary phenomenon” and said it expected to see a reversal in fortunes in the next two or three months.
In December, Maruti Suzuki had posted a 1% decline in total sales to 1,17,908 units. The company’s domestic sales dropped 4.4% to 1,06,414 units. While sales of mini segment cars, including, Alto and WagonR, declined by 15.3%, those of the compact segment comprising Swift, Estilo, Ritz, Dzire and Baleno shrank 8.6%.
Sales of mid-sized sedan Ciaz increased by 30.6%, while utility vehicles, including Gypsy, Grand Vitara, Ertiga, S-Cross and Vitara Brezza surged 75.3%.
