Months of slowing car sales at the country's largest carmaker Maruti Suzuki has hit the profit growth of the company. Maruti Suzuki on Thursday reported a 39 per cent drop in its net profit to Rs. 1,359 crore in the quarter ended September 30. In a regulatory filing during market hours, Maruti Suzuki said its revenue stood at Rs. 16,120 crore in the second quarter of current financial year, marking a decline of 25 per cent over the corresponding period a year ago. Shares fell more than 2 per cent after the earnings announcement before trimming most of those losses by the end of the session.
Seventeen analysts had on an average expected the company to post a profit of Rs. 1,076 crore for the July-September period, news agency Reuters reported citing Refinitiv data.
Maruti Suzuki reported its eighth straight monthly drop in vehicle sales and in August cut the number of its temporary workers to cope with the slowdown in auto sales.
The company sold a total of 338,317 vehicles during the quarter - down 30.2 per cent compared to the year-ago period. Sales in the domestic market fell 31.4 per cent to 312,519 units while exports stood at 25,798 units, Maruti Suzuki said in a press release.
The results have to be viewed in the context of exceptionally weak demand environment, Maruti Suzuki said.
This year, the automobile industry has seen a significant decline in sales owing to several factors. One of the main factors is increase in the cost of acquisition of the car due to various reasons coming together like implementation of more stringent safety and emission (BS6) norms, increase in vehicle insurance expenses and hike in road taxes in many states, Maruti Suzuki said.
Lower availability of finance and increased down payment requirement have affected the affordability of customers to own cars, it added.