- India’s largest car maker
Maruti Suzuki today reported a two-fold increase in its consolidated net profit on a year-on-year basis. - The increase is largely due to Covid disruptions hampering operations in the previous year.
- Maruti Suzuki also revealed that the chip shortage prevented it from manufacturing 51,000 cars – and that it is sitting on top of 2,80,000 orders as well.
Its revenues surged over 49% in the same period to ₹26,512 crore. But this could be a misleading number due to the low base effect of last year, which was in the throes of a severe second wave lockdown.
On a sequential basis, Maruti Suzuki witnessed a decline in all three parameters – its margins specifically bore the brunt of the sharp rise in commodity prices in Q1 FY23. The price hike in April this year was not enough to reduce the stress on its bottom line.
Maruti Suzuki hiked prices four times in FY22 and once in Q1 FY23. Despite the five price hikes, its year-on-year margin improved only 1.2% points.
Source: Company reports
Maruti Suzuki blamed high commodity prices, higher advertising expenses and lower non-operating income for the pressure on its margins. Material costs account for 75-78% of the total cost of a vehicle, which means commodity prices have a heavy impact on auto companies.
On the other hand, a declining Rupee and price hikes helped stave off some of this pressure.
In terms of volumes, on a sequential basis, Maruti Suzuki reported a net decline in units moved, although exports grew by 1%.
On a year-on-year basis, however, the car maker reported an overall increase of 32% -- again, due to the low-base effect, the growth numbers don’t tell the full story.
Source: Company reports
However, it is worth highlighting that the chip shortage has a large part to play in the sequential decline in sales.
“Shortage of electronic components in this quarter resulted in about 51,000 vehicles not being produced. Pending customer orders stood at about 2,80,000 vehicles at the end of the quarter and the company is making efforts to serve these orders fast,” the company said in an exchange filing.
The light-commercial vehicle segment witnessed the best growth year-on-year. The compact segment – which is Maruti Suzuki’s bread and butter – also grew at a healthy rate of 26.9%.
The ‘mini’ segment was the slowest to grow.
Source: Company reports
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