By Nandan Mandayam
BENGALURU (Reuters) -India’s top carmaker Maruti Suzuki on Monday reported a better-than-expected first-quarter profit, helped by strong orders, and forecast a rise in average selling prices in the coming quarters.
The company, which also revealed plans to buy its Japanese parent’s plant in Gujarat, said it did not see serious chip-shortage-related issues going forward. That problem had hurt the production of over 28,000 vehicles in the latest quarter.
Maruti’s order book stood at 355,000 vehicles in the first quarter, reflecting strong demand. Higher sales of the pricier and margin-boosting utility vehicles (UVs) along with falling input costs have helped carmakers report improved results.
Sales of Maruti’s UVs – which include the Brezza sport utility vehicle (SUV) and Ertiga people carrier – were up 56% in the April-June quarter.
Net profit more than doubled to 24.85 billion rupees ($302.3 million) for the quarter ended June 30, slightly beating analysts’ average estimate of 24.75 billion rupees, as per Refinitiv data.
The larger and more profitable vehicles can help Maruti recover lost market share in recent years, analysts have said. In 2019, it sold one in two cars made in India.
It is also facing growing competition from rivals as buyers shift to UVs, and higher costs as regulators demand safer and greener cars.
Maruti’s move to end contract manufacturing with Suzuki Motor Corp unit in Gujarat would let the Indian carmaker produce electric vehicles that were previously meant to be made by its parent, a Maruti executive said in an earnings call, highlighting how the existing arrangement was not working.
Shares of Maruti closed 1.6% higher ahead of the results.
($1 = 82.2080 Indian rupees)
(Reporting by Nandan Mandayam in Bengaluru; Editing by Varun H K)
