The country’s largest car manufacturer Maruti Suzuki India reported a 65.3 per cent decline in net profit to Rs 475.3 crore in the second quarter of 2021-22 against Rs 1,371.6 crore in the corresponding period last year.

Consolidated revenue from operations stood at Rs 20,551 crore in the second quarter compared with Rs 18,756 crore in the year-ago period.

Vehicle sales were down 3 per cent to 3,79,541 units against 3,93,130 units a year ago.

“The quarter was also marked by an unprecedented increase in the prices of commodities like steel, aluminium and precious metals within a span of one year. The company made maximum efforts to absorb input cost increases offsetting them through cost reduction and passed on a minimum impact to customers by way of car price increase,” Maruti said.

Material costs stood at an all-time high of 80.4 per cent of net sales, MSIL chairman R.C. Bhargava said. “Increase in material costs by 6.4 percentage points is a huge impact.”

A steady rise in the prices of commodities such as steel, aluminium and other precious metals has forced Maruti to raise prices thrice this year. In the last hike in August, prices were raised 1.9 per cent.

Bhargava said the company did not pass on the entire additional cost burden to the customers. The management intends to keep car prices in check through cost optimisation measures.

The company has no plans to raise car prices.

Bhargava expects the forthcoming months to be better. “We are hoping that November production will be higher. On CNG, we’re going to increase production to meet the demand. What we had expected in terms of volumes and profitability has changed substantially. We will not have double digit growth this year,” he said.

Electric vehicles

Maruti will launch electric vehicles in the country only after 2025 as demand for such vehicles at the moment is less and it would like to sell around 10,000 units a month whenever it enters the electric mobility space, Bhargava said .

“Unfortunately, we will not feel happy if we can (sell) 300 or 400 or 500 or even 1,000 cars a month. We have gone to much higher volumes, and volumes in 100s and even 1,000s, are very good, but they leave us a little unexcited.”

“So we have to see if I start selling EVs I would like to sell maybe 10,000 EVs in a month or something like that,” Bhargava said.