Maruti Suzuki India, the country’s biggest car maker, on Thursday reported its first decline in quarterly profit in over four years as a dip in the rupee’s value, rise in commodity prices and higher sales promotion expenses hit margins.
The auto major, which has over 50 per cent market share in the domestic passenger vehicle segment, reported a 9.8 per cent decline in net profit at Rs 2,240.4 crore for the second quarter ended September 30.
The company had reported a net profit of Rs 2,484.3 crore in the same period of the previous fiscal.
“In the second quarter, our sales numbers have not increased, the turnover is also marginally lower than last year… which leads to the question why this thing is happening? Prices of international crude have a significant impact on India. We had committed for a 10 per cent growth this year. We will continue to make our best efforts to achieve this figure,” R.C. Bhargava, chairman of Maruti Suzuki India, told reporters.
The company’s quarterly net profit has dipped after 17 quarters with the last decline taking place in the fourth quarter of 2013-14.
Net sales rose marginally to Rs 21,551.9 crore for the quarter under review against Rs 21,438.1 crore a year earlier.
Sales dipped 1.5 per cent during the July-September period at 4,84,848 units as rising fuel prices and changes in insurance norms impacted the overall buyer sentiment.
“There has been a significant impact of rising oil prices. Moreover, this year an insurance premium of three years had to be paid at the time of buying. So, a customer had to pay around Rs 9,000 extra at the time of buying, which impacted the sentiment,” Bhargava said.
Similarly, sentiments and laws relating to diesel became more adverse and the uncertainty over vehicles run on the fuel, particularly in Delhi/NCR, affected sales.
Bhargava said the current festival season had failed to bring in the numbers and the sales remained the same as before. “We used to witness a sales growth of around 10-15 per cent during the festival season but this year there is no indication for such a growth,” Bhargava said.
He added that the company was ramping up production of CNG cars as the government was trying to promote the fuel with plans to add 10,000 more outlets.