Maruti Suzuki India (MSIL), the country's largest carmaker, on Tuesday reported a 48 per cent fall in third-quarter (Q3) net profit, as the global chip shortage slowed production and high material costs squeezed margins.
The carmaker reported a standalone net profit of Rs 1,011 crore for the three months ended December, compared with Rs 1,941 crore a year earlier.
Standalone revenue for the Gurgaon-based company fell 1 per cent to Rs 23,246 crore. The preceding quarter saw the top line at Rs 20,538 crore. The company hopes to increase production in the fourth quarter, although it will not reach full capacity.
“Albeit unpredictable, the electronics supply situation is improving gradually,” it said in a statement.
The dent in MSIL figures reflects a general slowdown in the automotive (auto) industry, triggered by a global shortage in the supply of electronic components. The component crisis pruned the output from the MSIL stable by an estimated 90,000 vehicles.
But the company said on Tuesday there was no lack of demand as it had over 240,000 pending customer orders at the end of Q3.
“Month-on-month booking inflow has been quite steady at around 6,000 bookings per day,” said Shashank Srivastava, senior executive director, marketing and sales, MSIL.
Srivastava said while passenger vehicle (PV) sales lagged behind in the past few years due to increase in acquisition cost, they will show a compound annual growth rate (CAGR) of around 7-8 per cent.
The commentary of good demand from India’s largest carmaker is a positive sign for the industry that is currently hamstrung by poor sales. PV sales in India have been falling for four months in a row since September.
The auto industry in India is going through a long-term structural slowdown, given that the CAGR across all major vehicle segments has witnessed a decline over the past three decades, according to industry body Society of Indian Automobile Manufacturers (Siam).
From a CAGR of 12.9 per cent between 2004 and 2005 and 2009 and 2010, it came down to 5.9 per cent in the 2009-10 to 2014-15 periods. However, in the last five-year period, between 2014-15 and 2019-20 (FY20), the CAGR of the PV segment has dropped to just 1.3 per cent, revealed the Siam data.
“There were various factors, including regulation requirements like conversion from Bharat Stage (BS) IV to BS VI and other safety requirements, which increased the acquisition cost of a car and prevented growth in FY20. However, if you look at the future, I think we can look at CAGR growth in line with the economy, which will be around 7-8 per cent,” Srivastava told analysts in a post-earnings call.
He said rural sales for the company have been growing. “We expect rural sales to continue to remain robust. This is primarily because the kharif crop has been strong, sowing of the rabi crop and minimum support price are going up,” he said.
However, the company and the industry continue to remain cramped due to shortage in semiconductor chips, not allowing factories to reach optimum production level.
MSIL recorded a sales volume of 430,668 units during the quarter under review. This was 13 per cent lower than the 495,897 units it sold in the same period last year.
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