Maruti Suzuki profit 48% up as India buys more expensive cars | business-news | Hindustan Times
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Maruti Suzuki profit 48% up as India buys more expensive cars

Maruti Suzuki, India’s largest carmaker which sells one out of every two cars in country, posted profits 48% higher in its December-ending quarter, over last year, as average car prices India went up.

business Updated: Jan 25, 2017 15:51 IST
Sunny Sen
Maruti Suzuki

Maruti Brezza is one of the highest selling SUVs in the country(File Photo)

Maruti Suzuki, India’s largest carmaker which sells one out of every two cars in country, posted profits 48% higher in its December-ending quarter, over last year, as average car prices in India went up.

The carmaker posted Rs 1,745 crore of profits in the quarter, while its volume grew by 3.5%.

Maruti’s two best selling cars are the Baleno premium hatchback and the Vitara Brezza SUV -- along with older models of the Swift, Alto and WagorR -- both selling at average of 10,000 units, each, every month.

“Increase in share of the company’s higher segment models, lower sales promotion and marketing expense, cost reduction efforts and higher non-operating income contributed to increase in profits,” Maruti said in a statement.

The growing average price of cars has helped companies such as Maruti to safeguard itself against prime minister Narendra Modi’s demonetisation, the economic situation that weeded out 86% of the country’s bank notes in circulation.

Maruti’s chairman RC Bhargava told reporter in December, that the impact on the industry could be as high as 25% in the months following demonetisation. The cash crunch led to a 16-years low in car sales in the month of December. But, cars with a higher price yields higher margins, which helped Maruti.

The carmaker, which imports almost all its technology from its Japanese parent, Suzuki, is already looking at dawning a premium image with its Nexa dealerships. It sells the Baleno, S Cross and the recently launched Ignis through Nexa.

Maruti’s net sales grew by 12% to Rs 16,624 crore. It sold 387,251 passenger vehicles, including exports, in the quarter. Total passenger vehicle sales of India’s automakers, including exports, rose about 5% to 958,519 units during the period, according to Reuters.

Brokerages predicted that half of Maruti’s sales will come from higher-priced models, which was between 25% to 30% a few years ago.

(With inputs from Reuters)