By VarunVyas Hebbalalu and Nandan Mandayam
BENGALURU (Reuters) – India’s biggest carmaker Maruti Suzuki fell short of fourth-quarter profit estimates on Friday, as higher input costs and discounts on small cars offset the price hikes that the company implemented at the beginning of the quarter.
Maruti’s standalone profit rose 47.8% on year to 38.78 billion rupees ($465.4 million), compared with analysts’ estimates of 38.97 billion rupees on average, as per LSEG data.
This is Maruti’s first profit miss since the first quarter of fiscal 2023.
Realisations, or profit per unit sold, were low due to discounts on slow-selling entry-level models such as the Alto and S-Presso, Amit Hiranandani of SMIFS noted.
Sales of small cars have been beleaguered as high inflation contributed to making them unaffordable for their target demographic.
A recovery of demand within the small-car market will not happen this year, and maybe not in 2025, Maruti Chairman R.C. Bhargava said in a post-earnings media call.
The total expenses rose 16.3% to 343.55 billion rupees with input costs rising more than 10%. An executive for the company said that its cost increase is predominantly linked to its volume increase.
The more expensive sports utility vehicles (SUVs) helped bolster Maruti’s volumes with price hikes helping its revenue.
Its revenue from sales grew more than 19% to 366.98 billion rupees, and total sales volume increased 13.4% to 584,031 units.
Sales of passenger vehicles in India have risen to record levels over the last two fiscal years, with SUVs, which account for one in two cars sold, fuelling the growth.
($1 = 83.3200 Indian rupees)
(Reporting by Varun Hebbalalu and Nandan Mandayam in Bengaluru; Editing by Sohini Goswami and Vijay Kishore)
