Maruti Suzuki’s quarterly profit plunges 39%, steepest in 8 years


Fall in demand, higher sales promotion expenses attributed

Amid a severe demand slowdown, Maruti Suzuki India’s consolidated net profit declined nearly 39% to ₹1,391 crore in the quarter ended September 2019, the steepest quarterly fall in 8 years.

The country’s largest carmaker sold about 3.38 lakh vehicles in the quarter, 30% less than in the same quarter last year. Of this, the domestic market accounted for sales of about 3.12 lakh vehicles, a decline of 31.4% year-on-year. Net sales during the quarter declined 25% to ₹16,123 crore from ₹21,553 crore in the July-September 2018 period.

Prior to this, the highest decline the firm had seen in its net profit was 56% in July-September of 2011.

“The results need to be viewed in the context of an exceptionally weak demand environment. This year, the automobile industry has seen a significant decline in sales... one of the main factors is increase in the cost of acquisition of the car with new safety regulation and emissions norms being implemented at the same time, increase in vehicle insurance cost and hike in road taxes in many States,” Maruti Suzuki India Chairman R.C. Bhargava said.

He added that along with these, the lower availability of finance and increased down payment requirement have affected the affordability for customers to own cars. Net profit has also been impacted by higher sales promotion and depreciation expenses. He noted that sales in the festive season have picked up and compared to the previous festive season the growth this year may either be flat or marginally positive. However, he added this did not mean that “we are out of the woods and there is a revival.”

To a query on its EV launch, Mr. Bhargava said it would not happen next year as announced, mainly due to lack of infrastructure and government support for four-wheeler EVs.

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Printable version | Dec 9, 2019 1:46:26 PM |

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