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Informist, Thursday, Jul. 31, 2025

 

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--Maruti Suzuki:First-time car buyers' demand subdued in Q1 on affordability
--CONTEXT:Maruti Suzuki management's comments in post-earnings investor call
--Maruti Suzuki: New plant costs hit margin by 30 bps Q1, to smooth out FY26
--Maruti Suzuki: Dealer inventory fairly in control, at 33 days end of Q1
--Maruti Suzuki: Availability of rare-earth metals remains a challenge
--Maruti Suzuki: Discounts in Q1 flat on qtr on rupee per car basis
--Maruti Suzuki: Degrowth in sales slower in retail than wholesale in Q1
--Maruti Suzuki: Sales in rural areas doing better than urban areas
--Maruti Suzuki: See big exports rise after launching EVs in 100 countries
--Maruti Suzuki: Not increasing discounts in export markets
--Maruti Suzuki: Ambitious on EVs, other clean technologies
--Maruti Suzuki: Supply-chain resilience in EVs not fully established
--Maruti Suzuki: Plan to launch 2 SUVs during festival season
--Maruti Suzuki: About 97?rs by sales volume have 6 airbags as of Thu

 

By Rajesh Gajra

 

NEW DELHI – Affordability issues in the entry segment cars continued to affect the growth of the domestic passenger vehicle industry in the June quarter, the management of the largest car manufacturer in the country Maruti Suzuki India Ltd. said Thursday in a post-earnings call with investors and analysts. During the June quarter, "the participation of first-time buyers in car buying continued to remain subdued largely due to affordability issues" in the domestic market, the management said.

 

The demand environment was sluggish in the overall domestic market but it was better in the rural market due to improved consumer sentiment on the back of the early onset of monsoon, according to the management. The rural market was not only doing better than the urban market in the June quarter, but the rural growth was also positive, the management said in the investor call. "The consumer preference towards CNG (compressed natural gas) vehicles continues to increase," the management said, adding that in the June quarter, "every one in three cars sold by the company in the domestic market was a natural gas vehicle."

 

The sales degrowth in domestic passenger car sales was lesser in retail than in the wholesale segment in the June quarter, according to the management. The share of sales to government employees in total retail volume in the June quarter was in the mid-teens, the management said. Maruti Suzuki offered the same discounts on rupee-per-car basis in the June quarter as it did in the trailing quarter, according to the management. The inventory of the company's vehicles with the dealers in the domestic market was "fairly in control" in the June quarter and was "just about 33 days" at the end of the quarter, according to the management.

 

With regard to commercial production in the first phase of the company's greenfield factory at Kharkhoda which commenced in the March quarter, the management said being a new factory "it will take a while for the production to scale up." But overheads and depreciation associated with the new plant is getting captured in the profit and loss account, the management said. The hit on the margin in the June quarter "because of this is about 30 basis points which should go away as the utilisation goes up," it said.

 

The management said keeping in mind the need to raise safety standards of vehicles manufactured by Maruti Suzuki, the company had recently introduced six airbags in all its models. As of Thursday, "almost 97% of our volume by sales would have six airbags," the management said.

 

The company is looking at the upcoming festival season, that starts in the September quarter and runs into the December quarter, with "optimism." Maruti Suzuki has plans to launch two SUVs, one electric and one non-electric, in the current financial year.

 

To an analyst's question on how big was the rare-earth metals problem for Maruti Suzuki, the company's management said it was a challenge and its engineers have been working to mitigate it. The management said the consumption of rare earth magnets, for instance, is much higher in electric vehicles as compared to vehicles with internal combustion engines.

 

The management said supply chain resilience is a challenge in electric vehicles manufacturing in the sense that it is not fully established. "There are other questions around EVs also, like lithium availability or some other critical minerals availability," it said. But Maruti Suzuki is ambitious on electric vehicles and other clean technologies, according to the management.

 

The company is enthusiastic about a big increase in exports when it launches its electric vehicles in about 100 countries, including in Europe and Japan. "Japan is now, in Q1 (June quarter), the second largest export destination in all our portfolio, in all our global markets," the management said. There is no question of any increase in discounts in export markets, according to the management. "We are working with very sustainable, healthy margins," it said.

 

The company announced its June quarter earnings during market hours Thursday. The revenue from operations increased 8.1% on year to INR 384.1 billion while the net profit was up slightly by 1.7% to INR 37.1 billion. Shares of the company closed at INR 12,608 Thursday, down 0.1%, on the National Stock Exchange.  End

 

Edited by Tanima Banerjee

 

 

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