Maruti Suzuki has been witnessing a decline in sales and which has also resulted in the company cutting down on production given the low consumer demand in the industry.
The automotive industry is going through a rough patch as not only cars, but the entire market is witnessing a steep decline in sales be it commercial or private. Market leader Maruti Suzuki too has been feeling the pinch as the company is witnessing lower sales and as a result, has also been cutting down on the production month after month.
Now, the Indian auto giant has come out with their Q1 (April-June) FY 2019-20 results and as expected, things look grim. While we are all aware about the concerning condition of the Indian automotive industry, the numbers announced by our market leader Maruti Suzuki show just how serious the current condition is.
During this quarter comprising of April, May and June, Maruti Suzuki sold a total of 4,02,592 vehicles as opposed to 4,90,479 vehicles that the company sold in the same time last year (FY 2018-19), registering a decline of 17.9 per cent. Interestingly, during the same month last year, Maruti Suzuki had recorded a growth of 24.3 per cent.
Out of these, the domestic market recorded sales of 3,74,481 units as compared to 4,63,840 units being sold during the same time last year, which means the company saw a decline of 19.3 per cent in domestic sales.
However, when it comes to exports, there has been an increase as the company exported 28,113 units this quarter which is more than the units exported during the same time last year, which was 26,639 units.
The decline in sales directly reflects on to the revenue as well. During the same quarter, Maruti Suzuki registered net sales of Rs 187,352 million which is 14.1 per cent less when you compare it to the net sales of the company during the same time last year. Net profit for the quarter, as per the company, is Rs 14,355 million which is 27.3 per cent less than what they registered in the same period, last year.
And when you crunch the numbers, one of the most startling figures comes out. If you take the total car sales (4,02,594 units) and compare it against the total earning from sales in this quarter (Rs 187,352 million), the average earning for every car that was sold by the company during these three months comes out to be Rs 4.65 lakh.
And when you look at the net profit (Rs 14,355 million), this translates into Maruti Suzuki earning a profit of Rs 35,600 on average, per car, that was sold in this quarter.
Not only the industry sales slump led to the decline of sales for the company, but Maruti Suzuki also faced the toughest competition in years as many new car makers have entered India, like the MG Hector and Kia Seltos. Also, other traditional car makers like Tata and Hyundai have upped their game with successful products launches.
While Tata launched cars like SUVs like Nexon and Harrier, both of which are sold in good numbers, Hyundai launched the Venue, hugely denting the sales of Maruti Suzuki Vitara Brezza, the most sold compact SUV in India.
However, Maruti Suzuki could soon see some light at the tunnel as the company prepares to launch the more premium, six-seater version of the Ertiga called as the XL6 soon, which will be sold under the Nexa range of showrooms, and also has the S-Presso hatchback with SUV-like styling underway for this festive season – both of these launches could help in giving the much-needed boost for Maruti Suzuki in terms of sales.