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Maruti Suzuki profits down 27 percent – Avg per car profit Rs 35k for Q1 FY 2019

Maruti Suzuki has announced Q1 (April-June) FY 2019-20 results. And it doesn’t look great. Caught in a quagmire of slowdown, sales have been a challenge these last three months. For the period, the company has sold 402,594 vehicles. This accounts for 17.9 sales decline compared to the same period previous year.

Domestic market sales stood at 374,481 units. This accounts for 19.3 percent sales decline. Certainly a matter that’s gotten a lot of eyeballs since MSIL not only dominates domestic sales, it also hasn’t had such a poor quarter showing in years now. Q1 (April-June) FY 2019-20 exports are reported at 28,113 units.

The slowdown is compared to base sales of 490,479 vehicles during Q1 (April-June) FY 2018-19. At the time, sales growth of 24.3 percent was reported. Domestic market sales for the said three months last year was reported at 463,840 units. Exports were reported at 26,639 units.

For the quarter, the company has registered net sales of Rs. 187,352 million. Down 14.1 percent compared to the same period previous year. Net profit for the quarter is announced at Rs 14,355 million, lower by 27.3 percent compared to the same period previous year. The poor showing is attributed lower sales volume, and higher depreciation expenses.

With total car sales at 402,594 units, total earning from sales stood at Rs. 187,352 million. This translates into earning Rs 4.65 lakh on average for every car sold during the quarter. Similarly, net profits stood at Rs 14,355 million which means Maruti earned a profit of Rs 35,600 on average for every car sold in the said quarter.

MSILs performance though isn’t altogether surprising. The Indian auto industry has been tackling troubled waters almost all year now. To attain some sense of normalcy, the automaker has been continuously working on promotions. This has resulted in higher sales promotion expenses. Add to this depreciation, and low production capacity utilisation, and financial performance has waned.

In order to mitigate some of the losses, MSIL did reduce advertisement expenses, and made cost reduction efforts. Some advantage was gained from favourable commodity prices, and exchanges.

To boost sales, Maruti has planned new car launches. Next month, Maruti will launch Ertiga based XL6 premium MPV via Nexa dealers which will help increase profits. Later in November, Maruti will launch S-Presso mini SUV in the Rs 4 lakh range. This will help increase sales and market share around the Diwali 2019 period.

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