Business Line reported that Maruti Suzuki India 5.41% drop in net profit at INR 227.45 crore, for the quarter ended September 30th, largely because production disruptions at the company’s Manesar facility directly hampered diesel car sales.

A company statement said that “The market showed a marked preference for diesel cars, while demand for petrol vehicles dropped sharply. Despite scaling up production of diesel cars, the company has a customer wait list of nearly 1.25 lakh for its diesel vehicles.”

Mr Shinzo Nakanishi MD and CEO of MSI said that “The overall industry sales for petrol vehicles declined by 20%, while that of diesel increased by 40% during the quarter."

Adverse exchange rate and excessive discounts given by the company to rev up the slowing market were other reasons quoted by the company.

Mr Ajay Seth CFO of MSI said that “The company had given a discount of INR 14,750 per car during the quarter, which was an all time high. It was INR 12,600 in the Q1. Forex impact during the quarter was 2.1% on the net sales and discount impact was 1%. We could make up for 2% on account of cost reductions and price increases. So effectively there was a 1.1% impact on net sales.”

Source - Business Line

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