Maruti Suzuki sees strong festive season sales: 96,700 vehicles sold during Navratri

Rural sales in Q2FY21 were strong in the wake of a good rabi crop and it now accounts for 41% of total sales from 38.6% a year ago. The country’s biggest carmaker is now selling more smaller vehicles with the share having risen to 62.8% in the September quarter.

By:October 30, 2020 10:33 AM
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Maruti Suzuki chairman RC Bhargava on Thursday said demand for cars remains reasonably robust on the back of pent-up appetite and good purchasing power in rural India. Consequently, he believes there is no need for a cut in GST rates just yet. Maruti sold 96,700 vehicles during the Navratras and expects sales during Diwali in November to be good. “Typically, a downturn is followed by a good year. We have seen about one-and-a-half years of a downturn so there is a demand pull from postponed purchases,” he explained at a press conference. Rural sales in Q2FY21 were strong in the wake of a good rabi crop and it now accounts for 41% of total sales from 38.6% a year ago. The country’s biggest carmaker is now selling more smaller vehicles with the share having risen to 62.8% in the September quarter.

Bhargava, however, said it was hard to predict whether demand would sustain beyond December after the festive demand had been met and demand for personal vehicles satiated. “There is still not much clarity on urban demand and incomes,” he said. “If demand falls next year and if the decline sustains, the government should step in,” he added.  The company indicated that fleet sales had fallen sharply during the September quarter, indicating pressure on shared mobility.

Maruti posted a net profit of Rs 1,372 crore for the September quarter, up 1% y-o-y and lower than consensus estimates of Rs 1,526 crore. Net sales increased 10.4% y-o-y to Rs 18,744.5 crore on the back of a smart increase in volumes of 3,93,130 vehicles, up 16.2% y-o-y, but missed Street estimates of Rs 19,253.53 crore. Analysts observed the increasing share of smaller cars was telling on revenue growth. Lower expenses on sales promotion and operations, however, helped Maruti drive up Ebitda margins by 80 basis points y-o-y to 10.32% and pushed up the Ebitda by 20.3% y-o-y to Rs 1,933.6 crore.

While Maruti’s performance in Q2FY21 has surpassed that in Q2FY20, Bhargava pointed out it was nonetheless worse than that in Q2FY19 when the company had sold 4.55 lakh vehicles. “It is meaningless to say there has been a rebound because last year Maruti was down 16% against a normal growth of 10%,” he said.

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