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<ul><li>Maruti Suzuki has announced its Q2 FY20 earnings</li><li>Maruti profits fall by 39.3% as compared to the same quarter in the previous year.</li></ul>India’s largest car manufacturer Maruti Suzuki’s second quarter profits fell by 39.3% to ₹13,586 million from ₹22,404 million in the same quarter last year. Its total revenue from operations stood at ₹169,853 million. 
 
 
 
 
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 As the quarter reports came in, the shares of Maruti Suzuki fell by 1.68%. In the past one month, Maruti Suzuki's share price has increased as the public sentiment has expected better results from the festive season sales. 
 
 
 
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 When the last quarter results were announced on July 26, its share price gained over a percent immediately after the company’s earnings report because the performance was better than expected. Second quarter woes In the second quarter, its worries only worsened from the first quarter. Its sales fell by 24% in September as compared to the same month last year. It sold a total of 122,640 units during the month. 
 



 
 
 
 
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 In August, it had also slashed 3,000 contractual jobs as it had cut production. Maruti was expecting some traction as it started offering discounts across multiple car models during the the festive season. In September, Maruti Suzuki also slashed prices to align with the government’s plans to revive demand. It reduced the price of select models like Alto 800, Alto K10, Swift Diesel, Celerio, Baleno Diesel by ₹5,000. Maruti’s performance in the first quarter As the car slowdown hit the country’s automobile segment, almost every other manufacturer saw its profits fall in the first quarter of the current financial year. Maruti Suzuki’s first quarter sales fell 14% and profits fell by nearly twice as much, 27.3%. The total car sales for the first quarter had fallen by 17.9% as compared to the same quarter in the previous year.

Maruti Suzuki profits fall by 39.3% for the second quarter

<ul><li><keyword id="44883" type="CITY" weightage="20" keywordseo="Maruti-Suzuki">Maruti Suzuki</keyword> announced its earnings report for the first quarter of FY20. </li><li>Its profits have declined by 27.3%.</li><li>However, the company has managed to perform better than the market estimate. </li></ul>India’s largest car maker Maruti Suzuki’s first quarter sales fell 14% and the profit fell by nearly twice as much, 27.3%. But the share price gained over a percent immediately after the company’s earnings report because the performance was better than expected. Over the past few months, car sales have been woefully slow in India, which had led to a lot of talk on performance of auto manufacturers for the quarter. CLSA, the capital markets research firm, had predicted that its first quarter profits could decline by 35-40%. Maruti Suzuki, just like its peers, has been reporting its declining sales every month, which also led to the car manufacturer lose its stock market price. The depleting fortunes in India cost the company’s Japanese partner Suzuki <a href="https://www.businessinsider.in/suzuki-earnings-estimate-cut-as-marutis-india-sales-fall/articleshow/70128693.cms">$2 billion</a> in market capitalisation in just two days. 
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 <table style="border-width: initial; border-style: none; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;"> </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;">Q1 FY20 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;">Q1 FY19 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;">Total car sales </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;">402,594 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;">490,479 </td></tr></tbody></table> Maruti Suzuki said that a number of factors like higher depreciation expense, lower capacity utilisation, adverse commodity prices and higher sales promotion expense, impacted its results. Going forward, the company hopes that a strong product portfolio and commodity prices will help them get back on track.

India’s largest car maker Maruti Suzuki battles sales slowdown – profit beats street estimates

<ul><li>The Japanese car making giant has been hit by severe slowdown in car sales in India.</li><li>Suzuki shares have lost over a sixth of its share value this year due to the fear of depleting earnings.</li><li>Maruti accounts for over 52% of Suzuki’s global sale volumes.</li></ul>India’s largest car maker Maruti Suzuki has cut production for eight months in a row due to lack of buyers. The depleting earnings for Maruti is affecting its Japanese parent Suzuki, who just announced a nearly 40% cut in its estimate for operating income this year. The shares of Maruti fell over 2% immediately after the announcement from Suzuki. "The Company hereby revises the consolidated business forecast due to decrease in Japan production in the course of restructuring final inspection scheme, slowdown in Indian automobile market, and exchange rate fluctuations," <a href="https://www.release.tdnet.info/inbs/ek/140120191010406987.pdf" data-type="tilCustomLink" target="_blank">Suzuki said in a filing</a> with the stock exchanges in Tokyo. <table style="width: 188pt;"> </colgroup> <tbody><tr> <td class="xl63" style="height:15.0pt;width:101pt">March 2020 Forecast</td> <td class="xl63" style="border-left-width: initial; border-left-style: none; width: 87pt;">Cut</td> </tr> <tr> <td class="xl64" style="height: 15pt; border-top-width: initial; border-top-style: none; width: 101pt;">Net sales</td> <td class="xl65" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none; width: 87pt;">10.30%</td> </tr> <tr> <td class="xl64" style="height: 15pt; border-top-width: initial; border-top-style: none; width: 101pt;">Operating income</td> <td class="xl65" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none; width: 87pt;">39.40%</td> </tr> <tr> <td class="xl64" style="height: 15pt; border-top-width: initial; border-top-style: none; width: 101pt;">Ordinary income</td> <td class="xl65" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none; width: 87pt;">35.30%</td> </tr> <tr> <td class="xl64" style="height: 15pt; border-top-width: initial; border-top-style: none; width: 101pt;">Net income </td> <td class="xl66" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none; width: 87pt;">30%</td> </tr></tbody></table> Brokerage house CLSA has maintained a 'buy' rating on Maruti Suzuki with a target price of ₹7,950 over the next 12 months hoping that the new models will lure some buyers who are still on the fence. The slowdown in car sales is not unique to Maruti. Car sales in India fell 20.5% in September compared to a year earlier. Aside from the economic slump in India, car buyers have shied away from showrooms expecting duty cuts and lower prices as well as fearing a loss of value for their new cars when the new emission norms kick in next year. This has been a debilitating blow for Suzuki for whom India makes for <a href="https://economictimes.indiatimes.com/industry/auto/maruti-continues-to-drive-suzukis-global-growth-story/articleshow/67860711.cms?from=mdr">over half of all its global sale volumes</a>. “In view of the current sales environment, we lower our estimates for India domestic sales to +0.2% for FY2019 (from +5.4%) and +3.7% for FY2020 (+6.4%),” JPMorgan said in a report in June. The steady decline in car sales in India has been the worst in 18 years, according to the Society of Indian Automobile Manufacturers (SIAM). In September 2001, after the tech bubble burst plunging the global economy into a temporary crisis, the sales had dropped down by 21.91%. In rural India, the decline in demand for cars is attributed to a protracted farm crisis, made worse by the ongoing water crisis and deficient monsoon in many parts. This has had a significant impact on Maruti, which has a deeper reach and penetration outside the big cities too. People in India increasingly prefer cab aggregators like Ola and Uber, or even <a href="https://www.businessinsider.in/cars24-used-cars-startup-could-soon-turn-profitable-will-breakeven-by-december-2019/articleshow/69993448.cms">second hand cars to new ones</a>. SEE ALSO: <a href="https://www.businessinsider.in/business/corporates/news/mahindra-suvs-and-pick-up-trucks-are-a-rage-in-south-africa-even-in-a-shrinking-market/articleshow/71518308.cms" data-type="tilCustomLink" target="_blank">Mahindra SUVs and pick-up trucks are a rage in South Africa even in a shrinking market</a> <a href="https://www.businessinsider.in/union-budget-2019-indian-government-announces-tax-subsidy-for-purchasers-of-electric-vehicles/articleshow/70091003.cms">Tata Motors, Maruti, Mahindra will benefit from tax deductions on electric vehicles</a> <a href="https://www.businessinsider.in/cars24-used-cars-startup-could-soon-turn-profitable-will-breakeven-by-december-2019/articleshow/69993448.cms">EXCLUSIVE: Cars24 is racing towards profitability as Indians choose used cars over new ones</a> <a href="https://www.businessinsider.in/tata-motors-jaguar-land-rover-moodys-downgrade/articleshow/69889499.cms">Jaguar Land Rover is dragging Tata Motors along in its downward spiral</a>

Suzuki just slashed its operating income forecast by 40% citing slower sales in India

<ul><li><keyword id="44883" type="CITY" weightage="20" keywordseo="Maruti-Suzuki">Maruti Suzuki</keyword> has reported a drop in 24% in sales in September as compared to the same month last year.</li><li>Indian <keyword id="1108326" type="PERSON" weightage="20" keywordseo="auto-manufacturers">auto manufacturers</keyword> have reported a continuous decline in sales for over a year now. </li><li>Maruti Suzuki had also slashed prices to align with the Government’s plans to revive demand. </li></ul>There seems to be no end to the woes of the Indian auto industry. Maruti Suzuki reported a drop in 24% in sales in September as compared to the same month last year. It sold a total of 122,640 units in September 2019. Indian auto manufacturers have been reporting a consistent decline in monthly sales for over a year now. 
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 “My belief is that we are near the bottom of the downward cycle and the economy, and <keyword id="47168" type="COMPANY" weightage="20" keywordseo="Car-sales">car sales</keyword> should start to accelerate in the near future,” Marutii Suzuki’s chairman RC Bhargava <a href="https://www.thehindu.com/business/Industry/auto-industry-is-near-bottom-of-downward-cycle-maruti-suzuki-chairman-bhargava/article29267803.ece">said at the company’s annual general meeting earlier in August.</a> However, the situation doesn’t seem to have changed in spite of steep discounts and a festive season around the corner. Maruti Suzuki slashed 3,000 contractual jobs in August. Earlier in September, Maruti Suzuki also slashed prices to align with the government’s plans to revive demand. It reduced the price of select models like Alto 800, Alto K10, Swift Diesel, Celerio, Baleno Diesel by ₹5,000. “This reduction of price will be over and above the current promotional offers for the company’s vehicle range,” Maruti Suzuki said.

Maruti Suzuki car sales see no respite for the festive season, decline by 24% in September

The undisputed champion in small-car market, <keyword id="6365618" type="CITY" weightage="20" keywordseo="Maruti-Suzuki-India">Maruti Suzuki India</keyword>, is leaving no stone unturned to pierce mid-size and premium vehicles segment. For this, it is putting a new independent management structure and dealership in place to sell bigger cars, price between Rs 9 lakh and 10 lakh or above. 
 The mid-size segment is currently dominated by Japanese rivals <keyword id="20630" type="CITY" weightage="20" keywordseo="Honda">Honda</keyword> Motor and <keyword id="6374528" type="CITY" weightage="20" keywordseo="Toyota">Toyota</keyword> Motor and Maruti, which makes one in every two cars sold in India, is making more concerted efforts to enter the segment. 
 
Even though the company made many attempts in the past, it could not achieve much success. Maruti’s newest offering in the mid-size range, Ciaz, saw decent demand but it had to discontinue selling the Kizashi, a premium sedan it brought to India a few years ago, as it found very few buyers. 
 
As per reports by the Economic Times, merely 1-3% of Maruti's vehicle sales currently come from vehicles priced above Rs 10 lakh. 
Now, a fresh team, internally named NEXA, will aim at offering a different experience to customers. 
 
Partho Banerjee, Maruti's new Vice President for sales and dealer network, will head NEXA who will be supported by two zonal heads and eight regional heads. 
 
"Every year, our company reflects on the roadmap it intends to take. This new structure was decided last week by the company," a Maruti executive told ET. 
 
He added that just like Toyota has Lexus and Nissan has Infiniti as their luxury brands, Maruti Suzuki would have NEXA as its premium brand for vehicles priced above Rs 10 lakh. 
 
However, a Maruti spokesman declined to comment on "an internal company matter" but as per people once the new channel comes in, existing dealerships will not be able to sell cars which are priced above Rs 10 lakh. 
 
However, the present dealers have been given an option to open new NEXA outlets and Maruti is mulling to have at least 100 such outlets in the first 12-18 months, before expanding into the interiors of the country. Maruti presently has around 1,500 outlets. 
 
Meanwhile, the new outlets are likely to sell the upcoming crossover, globally called the S Cross, as well as 7-seater multipurpose and sport-utility vehicles Maruti plans to launch post-2018, people in the know told the financial daily. 
 
It is likely that Maruti may bring back Kizashi. 
 
"The company is likely to test the waters with the S Cross ... there are other models in the pipeline, which could be sold through these outlets, but they will depend on how the premium outlet model evolves," said one of people in the know. 
 
Gaurav Vangaal, senior analyst at IHS Automotive, said the move pointed at Maruti and Japanese parent Suzuki Motor’s aspiration to move towards the premium segment. 
 
"This is a bold move on part of Maruti Suzuki to transition to a higher level. The initial response to the Ciaz shows that there are takers for Maruti Suzuki in Rs 10 lakh range ...Having said that, it will be a challenging task for Maruti Suzuki to sustain this imagery over Rs 10 lakh,” he told ET. 
 
Another person who closely tracks the company said Maruti and its dealers may invest in personnel and training and the dealerships may have to hire executives from the hospitality or aviation industry for the NEXA outlets, to give different experience to customers. 
 
(Image: Reuters)

Maruti has set up ‘crack teams’ to drive out rivals Honda and Toyota from the Indian mid-size car segment

<ul><li>Production cuts at Maruti worsen the impact of slowing car sales in India. </li><li>Suzuki shares fell over 4.3% in Japan on Monday, and another 3.3% a day later, due to the threat to its earnings after the slump in India. </li><li>Maruti accounts for over 52% of Suzuki’s global sale volumes. </li></ul>Thousands of miles away from India, the share price of Suzuki is taking the beating for Indians shying away from car showrooms. The stock lost over 4.3% on Monday, and 3.3% on Tuesday, together worth nearly $2 billion in market capitalisation due to the falling demand for cars in general in India, which is eating into the profits of its Indian partner Maruti. India’s largest car maker <keyword id="44883" type="DOMAIN" weightage="20" keywordseo="Maruti-Suzuki">Maruti Suzuki</keyword> has cut production for the fifth consecutive month due to lack of demand. Overall output in India will be down 15% while that of small cars will down to half in July compared to a month earlier, Maruti said. Maruti’s shares fell 4.8%, shedding ₹7,000 crore in market value on Monday. “In view of the current sales environment, we lower our estimates for India domestic sales to +0.2% for FY2019 (from +5.4%) and +3.7% for FY2020 (+6.4%),” JPMorgan said in a report. This will be a debilitating blow for Suzuki for whom India makes for <a href="https://economictimes.indiatimes.com/industry/auto/maruti-continues-to-drive-suzukis-global-growth-story/articleshow/67860711.cms?from=mdr">over half of all its global sale volumes</a>. All Indian car makers put together saw a decline in sales of 18.8% in June, the <a href="https://www.businessinsider.in/june-monthly-car-sales-data-points-to-a-severe-slowdown-in-india/articleshow/69985355.cms">seventh straight monthly fall in car sales</a>, and the worst in 18 years, as per the Society of Indian Automobile Manufacturers (SIAM). In September 2001, after the tech bubble burst plunging the global economy into a temporary crisis, the sales had dropped down by 21.91%. 
 
 
 
 
 
 
 
 
 
 
 
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 The current slowdown in car sales is largely attributed to a broader economic slowdown, lack of jobs, and a decline in consumer sentiment over the last couple of years, starting from the demonetisation in November 2016 followed by the introduction of the Goods and Services Tax (GST) soon after. In rural India, the decline in demand for cars is attributed to a protracted farm crisis, made worse by the ongoing water crisis and deficient monsoon in many parts. This has had a significant impact on Maruti, which has a deeper reach and penetration outside the big cities too. People in India increasingly prefer cab aggregators like Ola and Uber, or even <a href="https://www.businessinsider.in/cars24-used-cars-startup-could-soon-turn-profitable-will-breakeven-by-december-2019/articleshow/69993448.cms">second hand cars to new ones</a>. Double whammy However, the declining sales have not led to a fall in its price. The price of cars is on a rise due to the new emission norms set to kickstart in India from April 2020. The new mandatory BS-VI (Bharat Stage-VI) emission norms are set to make the <keyword id="421590" type="PERSON" weightage="20" keywordseo="diesel-engine">diesel engine</keyword> operated vehicles, especially cars, more expensive. “The rollout of new emissions standards (BS6) and Suzuki's competitive edge (mainly in gasoline cars), we think conditions are currently at their worst amid a bleak short-term earnings outlook, and continue to believe that now is the time to consider medium-term investment,” JPMorgan said. SEE ALSO: <a href="https://www.businessinsider.in/union-budget-2019-indian-government-announces-tax-subsidy-for-purchasers-of-electric-vehicles/articleshow/70091003.cms">Tata Motors, Maruti, Mahindra will benefit from tax deductions on electric vehicles</a> <a href="https://www.businessinsider.in/cars24-used-cars-startup-could-soon-turn-profitable-will-breakeven-by-december-2019/articleshow/69993448.cms">EXCLUSIVE: Cars24 is racing towards profitability as Indians choose used cars over new ones</a> <a href="https://www.businessinsider.in/tata-motors-jaguar-land-rover-moodys-downgrade/articleshow/69889499.cms">Jaguar Land Rover is dragging Tata Motors along in its downward spiral</a>

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Maruti Suzuki profits fall by 39.3% for the second quarter

Sanchita Dash

India’s largest car maker Maruti Suzuki battles sales slowdown – profit beats street estimates

Sanchita Dash

Suzuki just slashed its operating income forecast by 40% citing slower sales in India

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Maruti Suzuki car sales see no respite for the festive season, decline by 24% in September

Sanchita Dash

Maruti has set up ‘crack teams’ to drive out rivals Honda and Toyota from the Indian mid-size car segment

BI India Bureau

Suzuki just lost nearly $2 billion in 2 days because of what’s happening in India

BI India Bureau

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