Indian carmaker Maruti Suzuki misses Q3 profit view on higher discounts
Business
Indian carmaker Maruti Suzuki misses Q3 profit view on higher discounts
(Reuters) - Maruti Suzuki, India's top carmaker by volumes, missed third-quarter profit expectations on Wednesday, hurt by higher discounts and a dip in small car sales.
Following two years of rapid growth, Indian automakers faced pressure throughout much of 2024 due to weak demand for new cars and rising costs, which led them to provide bigger discounts.
Analysts also noted that discounts during the quarter increased, driven by year-end sales incentives and promotions during the festive season.
The 'Alto maker's standalone profit rose 12.6% year-on-year to 35.25 billion rupees ($407.3 million) for the quarter that ended Dec. 31, but missed analysts' estimates of 36.62 billion rupees, per data compiled by LSEG.
However, Maruti's revenue grew 15.5% to 368.02 billion rupees, boosted by the sale of pricier and higher margin utility vehicles, which mainly comprise sport utility vehicles (SUV).
Maruti's utility vehicle sales rose 20.2% in the reported quarter.
Sales in its largest small car segment, which includes popular models like the 'WagonR' and 'Swift,' fell by 3.7% in a market that is increasingly favouring sport utility vehicles.
Smaller cars or hatchbacks made up for about 30% of sales in India in the third quarter, while utility vehicles comprised about 67%.
Maruti's total expenses rose 15.5% as costs related to clearing inventory came in at 6.8 billion rupees, a significant increase compared to an income of 22 million rupees during the same period last year.
Its bottom line was also hurt by higher sales promotion expenses, the company said.
Last month, the New Delhi-headquartered firm said it was hiking prices across its range of cars to cope with rising costs.
Its shares, which were trading 0.2% higher before the results, reversed course and were down 1% as of 2:44 p.m. IST.
