The Hindu Business Line : Strong sales, moderate margins from Maruti

Maruti Suzuki has registered a strong set of numbers for the latest quarter. Net sales for the September quarter grew 33 per cent on a year-on-year basis. The company has posted 27 per cent growth in net profit for the same period. This has been achieved in a scenario of stiff interest rates and consequent slowdown in the automotive industry. The A3 segment (Esteem, Baleno, SX4), boosted by the success of SX4 has been a major contributor to this performance. The number of vehicles sold in this segment has increased by about 69 per cent in this quarter in comparison with the same quarter last year. Besides, the A2 or the compact car segment (comprising the Swift, Zen Estilo, Wagon R and Alto) in which Maruti has a 70 per cent market share has also done well thanks to the strong performance of the Swift Diesel and Zen Estilo. Responding to the stiff competition from the multi-utility vehicles segment, the company had re-launched the ‘Vitara’ in July this year. As on September 30, 447 units of the Vitara have been sold.

To counter a slowdown in offtake due to higher financing costs for vehicles, discounts ranging from Rs 10, 000-60,000 were offered on models such as Alto, Estilo, Wagon R, Swift (petrol) and Esteem. This could explain the decline in margins on a sequential basis, from 20.3 per cent to 17.29 per cent. Margins have however, been maintained relative to last year. The unfolding scenario on interest rates, demand for vehicles in the ongoing festival season and improvement if any, in pricing, would be key to sustaining this performance.

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