INDIA: Maruti Suzuki profits slump in market slowdown
Maruti Suzuki has reported a bigger than expected fall in profits for its third fiscal quarter as it continues to struggle with falling sales in the Indian market and the weakness of the local currency.
A 64% fall in net profit in the quarter reflects a slowdown in the Indian market although company chairman RC Bhargava said he believed India’s top carmaker would fare better in the final quarter to the end of March.
Profits were also bit by high interest rates and fuel costs while the weakened rupee increased costs of imports. Maruti, 54.2% owned by Suzuki, saw sales drop 28% in the third quarter ended December.
The company is also still recovering from strikes which shut down its factories in Manesar, north India, for weeks during the summer at a cost of over US$500m, and a consequent production loss of 40,000 vehicles during the quarter.
Profits fell to INR2.06bn ($41m) from INR5.65bn ($112m) a year earlier, while sales dropped to INR76.6bn ($1.5bn) from INR92.8bn ($1.8bn).
Maruti has a market share of just over 50% and Bhargava added that the company may struggle to post a rise in sales volume in the fiscal year.
In an effort to offset rising costs, Maruti has followed domestic rivals Mahindra & Mahindra and Hyundai with price increases across its range of up to 3.4%.