The country’s largest carmaker said it expects a reduction in production by 1.16 lakh vehicles in the quarter.
Maruti Suzuki India Ltd on Wednesday reported a 66% drop in second quarter net profit to Rs 487 crore after being hit by an “unprecedented” rise in commodity prices and shortage of semiconductors.
The country’s largest carmaker said it faced an estimated production shortfall of 1.16 lakh vehicles in the quarter – normal monthly production is around 1.50 lakh units – due to a shortage of electronics components mostly in line with domestic models, while material cost has risen to a record 80.4%. of net sales at the end of the September quarter.
Chairman RC Bhargava said the company had over 2 lakh customer orders pending at the end of the quarter, most of which were for CNG vehicles due to rising prices of petrol and diesel.
“The Covid situation, especially in the second quarter, was not very bad,” Mr Bhargava said during a virtual press conference. “But the shortage of electronic components and the unprecedented scale increase in the prices of commodities such as steel, aluminum and precious metals have bucked all earlier estimates and expectations.”
The component shortage had a major impact on Maruti as compared to other OEMs as a particular component belonged to a single German seller, whose factory in Malaysia was hit the hardest by COVID, he said. “So both of these factors have had a big impact on our results in terms of volume, in terms of profits,” he said.
However, he added that despite this, the company’s export figures are “almost unreliable”. Exports of 59,408 units are the highest in any quarter for the company and Mr. Bhargava said that this level of exports looks sustainable. The company is particularly strengthening its position in the African market where they are supported by Toyota dealerships.
The company’s consolidated revenue from operations stood at Rs 20,551 crore during the quarter under review, as against Rs 18,756 crore in the year-ago period. However, overall vehicle sales were down 3% at over 3.79 lakh units.
Outlook
Asked for guidance on sales growth in the current fiscal, Bhargava said, “We will not have double-digit growth.”
He said that while the market is improving and there are a large number of customers who are waiting for cars, “it is very difficult to predict what will happen in the future because this amount of electronic component supply along with commodity prices.” The field is not that easy. Predicting.”
EV Plans
Responding to a query, Mr Bhargava said the company is likely to launch an electric vehicle soon, but sometime before 2025, as the current EV sales numbers “excite us a bit”.
“Unfortunately, we won’t be happy if we can sell 500 or even a thousand cars… Those are good numbers but they excite us a little bit. So we’ll have to see if I start selling electric vehicles, I Would like to sell maybe 10,000 electric vehicles in a month,” Mr. Bhargava said.
When asked about a possible timeline for the launch, he said, “I’ll probably give you an out date… Maybe before 2025… It’s all on market conditions, on consumers, what is the cost of electric batteries.” ‘Depends on how the infrastructure is built. Up…,” he argued.
He said that if Maruti Suzuki is selling two million vehicles a year, which he believes will be back to normal, then does it make sense for the company to sell a car that has an annual turnover of less than one lakh? There will be demand.
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