“We are in an optimistic situation at present unlike previous press conferences,” R C Bhargava, Chairman, Maruti Suzuki India (MSIL), has said.
Announcing Q2 results, he said that the Indian economy and the auto sector had reached a stage where they will surpass the FY19 peak levels in FY23. However, MSIL might just be able to reach the FY19 numbers in terms of sales and not surpass them. The reason behind the outlook, as opined by the Chairman, is that the hatchback and the small car segments have continued to show a downfall for the past two years.
Performance
The company's standalone profit for Q2FY23 increased to INR 2,061.5 crore, up from INR 475.3 crore reported in the same period last year.
Interestingly, the carmaker sold 5.17 lakh units during the quarter, which is the highest ever in any quarter, registering a growth of 36% YoY. While the domestic sales stood at 4.54 lakh units, exports were at 63,195 units.
Meanwhile, the standalone revenue from operations for the company increased by 46% YoY to INR 29,931 crore.
Growth Momentum
Although sales of the hatchback and the small car segments have seen a jump during the festive season, it is unlikely that there will be continuous growth in the segment in the next quarter or next year, the MSIL chief said.
Added to this is that the company is still being hampered by chip shortages, although not as bad as last year. MSIL is being affected by the chip crisis from only one of its suppliers, which has affected four of its models in the portfolio.
Interestingly, even after working on a 90% utilisation level, the shortage of electronic components has impacted production by about 35,000 vehicles during the quarter, the company said.
Despite the challenges, Bhargava and the team are assertive about achieving the two million units target by the end of FY23, which it announced earlier.
Changing Strategies With Changing Market
During the conference, Bargawa noted that MSIL is very much a part of the Indian auto industry and in view of the changing market scenario, the company is also bound to change its strategy accordingly.
The company launched two of its new SUVs, the Brezza and the Grand Vitara, during Q2FY23, which is the key reason behind the increase in sales in the quarter. Additionally, MSIL plans to showcase more SUVs that it intends to launch in the upcoming Auto Expo 2023.
Shashank Srivastava, Senior Executive Director (Marketing & Sales), MSIL, noted that the company has seen over 75,000 bookings for the Grand Vitara to date since its launch in July and out of this, about 25,000 bookings were made for the strong hybrid variant.
Despite this, the Maruti chief noted that the hatchback and the entry-level segment still play a very big and important role in the company’s portfolio.
He continued that although the preference for these vehicles has come down over the last couple of years, these PVs still consist of most sales for the brand.
Meanwhile, as fuel prices continue to rise, the company is also witnessing a strong surge in demand for the CNG models. As a result, MSIL plans to introduce more CNG models across its portfolio. However, Srivastava added that newer models will be launched as the waiting period for the existing models reduces. Currently, the company offers CNG variants with ten of its products out of the 19 it has in its portfolio.
Rahul Bharti, Executive Officer- Corporate Affairs, MSIL, noted that as the industry is moving towards BS6 Phase II, the company has already made progress in achieving the said regulation norms, with 60% of the applications already being covered.
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