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Informist, Wednesday, Jan. 29, 2025

By Anand JC

MUMBAI – Maruti Suzuki India Ltd. expects its retail sales volumes to grow 3.5% in the ongoing March quarter, similar to the growth rate seen in the first nine months of 2024-25 (Apr-Mar), its management told analysts during a post-earnings call on Wednesday. It lamented the continuing trend of demand in rural areas outpacing that in urban areas.

In the December quarter, growth of retail sales in rural areas was 15%, higher than the 2.5% growth in urban areas, which led to an aggregate growth of about 8.3% during the period. While urban areas did see growth, it continues to be lower than in rural areas, Maruti Suzuki said.

The country's largest passenger vehicle-maker said it wants to enter the next financial year with less inventory, an issue which troubled the sector for a good part of FY25. The company pared its inventory, like its peers, through heavy discounts in the latter part of 2024. Its sales promotion during the quarter increased 20 basis points from Jul-Sept, largely on account of seasonality and increase in discounts.

The company also incurred higher advertising expenses during the final quarter of 2024 to boost the reach of its newly launched variant of the sedan Dzire and its first electric vehicle, the e-Vitara. These expenses affected Maruti Suzuki's operating margin by about 40 basis points sequentially in the December quarter. Maruti Suzuki currently has 20,000 pending orders for the new Dzire, it said.

The Haryana-based automaker said the December quarter wasn't a positive for hatchbacks. The entry-level hatchbacks contracted, mid-level hatchbacks were nearly flat, and the premium hatchbacks did see some growth. Maruti Suzuki said it is a clear trend that the upper segments are doing well, but the lower ones are not, which is a challenge for the company.

Mid-sized passenger vehicles and utility vehicles continued to dominate growth rates for Maruti Suzuki in the reporting quarter as smaller cars continued to lag. Compact and mini plus compact contribute 39% and 45%, respectively, to the company's domestic sales. Utility vehicles' share of total sales is just below 40%.

The company earned an export revenue of INR 65 billion during the December quarter. The management said exports grew in Africa, Latin America, West Asia and its Southeast Asian markets. The company said it exported as many vehicles in the December quarter as it did in an entire financial year four years ago. 

Maruti Suzuki announced its earnings during market hours. It reported a net profit of INR 35.25 billion for the December quarter on revenues of INR 384.92 billion. While its top line and bottom line both grew in double digits, they missed analyst estimates. Having traded as high as 1.5%, shares of the company reversed their trajectory after earnings were disclosed and closed Wednesday's session 1.2% lower at INR 11,977.90 on the National Stock Exchange.  End

Edited by Deepshikha Bhardwaj

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