Maruti Suzuki is anticipating good sales till December 2020, despite the festive season ending in mid-November 2020. However, for January 2021, the automaker needs to observe, believes RC Bhargava, Chairman, Maruti Suzuki India Limited.
According to Maruti Suzuki, its overall sales were good during October 2020. Specifically, during the Navratri period, it registered 96,700 units, up from the same month in 2019, even though the Coronavirus pandemic has hit the auto industry and consumer sentiment hard.
As Bhargava said, there won’t be much different in sales in October 2020, as compared to October 2019. He also hopes that November 2020 should be better in terms of sales. This is because this year, Navratri and Diwali are in November, while in 2019, these festivals were in October.
Maruti Suzuki hopes rural areas across India will contribute to its sales growth in coming months. However, there is uncertainty regarding the urban sales.
Historically, the year following a downturn always had registered higher sales because of the pent up demand. “The industry has witnessed about one and a half years of downturn now. The auto industry has done well in the second quarter and I don’t think anyone has suffered because of lack of demand,” said RC Bhargava.
The Maruti Suzuki Chairman also pointed out that constraints in ramping up the production are having a bigger impact on sales and there is no real slowdown in demand for vehicles. As he said, “At Maruti Suzuki, we are selling all of what we produce, due to a partial push from the people who were postponing their purchases.” However, he is not sure how long this demand will continue.
Besides the pent up demand, reduction in interest rates also helped push the demand for cars.
Union Minister Piyush Goyal has repeatedly advocated for the Indian companies to cut down royalties to their foreign parent firms. The issue was raised during this year’s SIAM and ACMA annual conventions as well. Maruti Suzuki being India’s largest carmaker and with around 50% market share in the country’s domestic auto market pays a hefty amount to its parent firm Suzuki Motor Corporation for using its technologies, platforms and other resources. Talking about this, Kenichi Ayukawa, MD and CEO of Maruti Suzuki India Limited, said, the auto major needs support from its parent company in order to develop new products.
Maruti Suzuki posts marginal profit growth in Q2 FY21
Meanwhile, Maruti Suzuki on has reported a marginal growth of 1.0% in standalone profit at Rs 1,371.60 crore in the second quarter (July-September) of FY21, as compared to Rs 1,358.60 crore in the corresponding quarter in FY20. This came after Maruti Suzuki reported its first quarterly loss at least in the past 15 years, in the Q1 (April-June) of FY21.
Commenting on this, RC Bharagava said, “We cannot term this as growth as we are much lower than we were two years ago. I would call it a rebound when sales exceed at least 10% of what we sold in FY 2018-19.”
The operating profit for the Q2 was Rs 1,167.70 crore, up 71.7% from the same period a year ago. This came on account of higher sales volume, lower sales promotion expenses, lower operating expenses and cost reduction efforts partially offset by increase in commodity prices and adverse foreign exchange movement. Talking about the financial result of the company, Ajay Seth, Chief Financial Officer (CFO), Maruti Suzuki said that the company has been pursuing cost-saving measures and in the Q2 FY21, it has saved Rs 270 crore more than the same quarter of FY20.
With the gradual reopening of the Indian economy and improvement in supply chains, Maruti Suzuki sold 3,93,130 vehicles in Q2 FY21, up 16.2% as compared to the same period in FY20. The automaker recorded 3,70,619 units of domestic sales, up 18.6% from the same period a year ago, while exports were at 22,511 units, down 12.7% as compared to Q2 FY20. During the Q2 FY21, Maruti Suzuki registered net sales of Rs 17,689.30 crore, up 9.70% as compared to the same period a year ago.