Maruti Suzuki: Mid-size cars, UVs give sales boost

Parvatha Vardhini C | | Updated on: Oct 27, 2016

Robust volume growth and price increases helped Maruti Suzuki clock a 29.4 per cent growth in net sales to ₹17594.6 crore in the quarter ended September 2016, over the same period last year.

After tepid volumes due to production losses in the last two quarters, the company recorded a volume growth of 18.4 per cent in this quarter.

Much of the volume growth came from the mid-size and the utility vehicle segments comprising vehicles such as Ciaz, S-Cross and Vitara Brezza. A price increase of ₹20,000 on the Vitara Brezza, ₹10,000 on Baleno along with hikes of ₹1,500-5,000 on other models also helped the strong growth in sales.

Besides, the higher price points of these vehicles helped average realisation per vehicle improve by 9.3 per cent over the same quarter last year to ₹4.2 lakh.

Despite an adverse foreign exchange impact, operating margins expanded to 17.3 per cent vis-à-vis 16.5 per cent last year. Besides the richer product mix, this expansion was possible due to material cost reduction, lower discounts, lower advertising and selling and distribution expenses. Raw material costs as a percentage of net sales came in at 67.5 per cent compared with 74.2 per cent last year.

Below the operating level, a 50 per cent increase in taxes was overshadowed by lower depreciation due to change in the method of depreciation of certain assets and a 71 per cent jump in other income.

These factors helped net profit growth zoom by 60.1 per cent to ₹2,398 crore.

As commodities move up from their rock-bottom levels, raw material benefits may dwindle in the quarters to come. But the company’s improving product mix should support margins to an extent.

Published on January 16, 2018

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