Q4 results: Demand for SUVs drives Maruti Suzuki earnings rises 47%
The consolidated net profits of Maruti Suzuki India (MSIL) increased by 47.1 per cent year-on-year (Y-o-Y) to Rs 3,952.3 crore in the fourth quarter of 2023-24 due to a jump in production, no constraints in supply chains, cost savings, and rising demand for sport utility vehicles (SUVs).
The company’s consolidated annual net profits for 2023-24 surged to Rs 13,488.2 crore, marking a notable 63.2 per cent Y-o-Y increase.
MSIL Chairman R C Bhargava told reporters the construction of its plant in Kharkhoda, Haryana, was progressing smoothly, with its first line slated to commence production before March 2025.
“We will add a production line at the Kharkhoda plant every 12 months,” he added.
Bhargava further stated the company was yet to finalise the location of its new plant in Gujarat due to the model code of conduct (MCC) being in force following the announcement of the Lok Sabha elections in the country.
Currently, MSIL boasts an annual production capacity of 2.35 million units, with plans to ramp it up to 4 million units by 2030-31.
Bhargava said a rebound in the small-car market was not going to happen this or next calendar year.
“I think a rebound this financial year is a little optimistic. I don’t think it will happen so quickly. It will take more time. Therefore, SUVs will remain the dominant segment in the car market,” he noted.
In 2023-24, the number of vehicles sold in the domestic small car segment, comprising sedans and hatchbacks, experienced a decrease of approximately 11.4 per cent Y-o-Y, totalling 1.548 million units.
MSIL maintains its leadership position in both the small car and SUV segments.
In 2023-24, approximately 99,000 electric cars and 89,500 hybrid cars were sold in India. However, in the last six months of 2023-24, sales of hybrid cars were higher than those of electric cars.
When asked about this outlook on hybrid cars, Bhargava said: “We will have to wait for a few months before we get to know for sure what the government is planning to do about goods and services tax (GST) on hybrids.” Last month, Union Roads and Highways Minister Nitin Gadkari suggested the taxes on hybrid cars be reduced to 12 per cent from the existing 43 per cent.
Bhargava noted: “It makes a huge difference whether GST on hybrids remains at 43 per cent or whether, as Mr Gadkari has mentioned, it comes down to 12 per cent. I think that will make a big difference to the demand for hybrids. So, it is very difficult for me to predict today what will happen to hybrids in the second half of this year.”
Indian carmakers hit a new peak in 2023-24 with sales of 4.23 million passenger vehicles (PVs) domestically, marking an 8.74 per cent Y-o-Y increase, driven by strong demand for SUVs, robust rural sales, and high growth in gross domestic product.
“I think the car industry today is not looking at double-digit growth in 2024-25. Society for Indian Automobile Manufacturers is looking at a much lower rate of growth, partly because last year saw high growth so the base has risen. But, I think, if the conditions become what I think they could become after elections, then I think MSIL at least will be in a position to record over double-digit growth and, if not, then closer to it,” Bhargava stated.
“I think inflation is going to be under control in 2024-25 and that will possibly lead to reduction in interest rates in the second half of the financial year. If that happens, that will give a further boost to car demand,” he noted.
However, he highlighted potential challenges such as the ongoing Red Sea crisis, which could impact the supply chain or the import and export of finished cars.
D K Mudaraddi, research analyst, Stoxbox, said the company’s Q4 results reflected a “strong performance” from an industry leader, which had shown the ability to capture the market through proactive measures and robust efficiency.
First Published: Apr 26 2024 | 9:41 PM IST