Maruti Suzuki produced its best figures in more than a year to more than double net profit in the third quarter, suggesting India’s largest carmaker by sales is recovering following a troubling period marked by slack demand and industrial unrest.
The Indian subsidiary of Japanese manufacturer Suzuki shut one of its main factories last July following riots and the death of an employee, while the group has also suffered against a backdrop of weak sales across India’s typically fast-growing car market.
However Maruti exceeded market expectations by reporting quarterly net profit rose 144 per cent to Rs5bn ($93m) compared with the same period last year, sending shares up about 4 per cent in Mumbai.
“The growth in net profit was primarily due to higher sales and good response to new models like Ertiga and Swift DZire. The company’s continued cost reduction efforts helped to drive profit in the quarter,” Maruti said.
The group’s net sales, a measure of revenues that excludes excise charges, also rose in for the quarter ending in December, up 46 per cent to Rs109bn.
Before Friday’s figures Maruti had reported five consecutive quarters of falling net profits, while last year’s factory unrest, which closed its troubled facility in Manesar for a month, lost the company about $240m.
Maruti has been India’s market leading car company for more than a decade, with particular dominance of the entry-level segment, where models such as the best-selling Alto have proved popular with the nation’s emerging middle class.
Despite its recent shutdown and a history of labour unrest, the group remains comfortably India’s market leader, selling more than 1m cars a year, nearly three times more than second-ranked Hyundai.
Maruti’s results follow a grim period for Indian car sales more generally, during which the Society of Indian Automobile Manufacturers, a trade group, has repeatedly cut growth forecasts for the sector, which it now says may not expand at all during this financial year.
Rakesh Batra, head of automotive at Ernst & Young in India, said: “The last six months have been tough, but the market is mixed, with certain segments doing OK like SUVs, while the main subcompact and mini car segments have seen less growth than expected.”
He added: “As we go into 2013, we are going to see another quarter or two of subdued conditions, but then as the economy bottoms out we are likely to see pickup in demand again.”