Indian carmaker Maruti Suzuki's revenue slows to near 3-year low
The company was hit by low demand for small cars and bigger discounts
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MARUTI Suzuki, India’s top carmaker by sales, reported its slowest quarterly revenue growth in nearly three years on Tuesday (Oct 29), hurt by low demand for small cars and bigger discounts, which weighed on margins and sent its shares sliding 6 per cent.
The ‘Brezza’ SUV manufacturer’s standalone revenue from operations rose 0.4 per cent to 372.03 billion rupees (S$5.85 billion) for the July-September quarter, while analysts expected it to rise 1.4 per cent to 375.59 billion rupees, per data compiled by LSEG.
The growth in revenue was Maruti Suzuki’s slowest since it last reported a fall 11 quarters ago.
Its profit, meanwhile, dropped for the first time in 11 quarters, falling 17 per cent to 30.69 billion rupees, largely due to a deferred tax liability of 8.38 billion rupees to account for the government retroactively removing long-term tax benefits for investments before April 2023.
However, excluding the tax liability, profit increased 6.3 per cent year-on-year.
Maruti Suzuki kicks off second-quarter earnings for the world’s third-largest car market, where sales to domestic dealers declined for the first time in over two years between July and September.
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Lukewarm demand for new cars has forced manufacturers to moderate dispatches to dealers and dish out higher discounts to attract buyers as showroom owners grapple with rising levels of unsold cars.
The higher discounts also led to a drop in margins on operating earnings before interest and taxes to 10.3 per cent for the second quarter from 11.1 per cent a year ago, the company, which is majority-owned by Japan’s Suzuki Motor, said.
Maruti’s overall sales volumes in the quarter fell 2 per cent year-on-year, hurt by a continued drop in the sales of small cars – which is its biggest segment and comprises 38 per cent of the total – while sales of its high-margin utility vehicles were little changed.
Small care sales dropped 13 per cent in the quarter. REUTERS
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