Maruti's US revenue zooms past Suzuki's
The Indian subsidiary reports 10% growth, while its Japanese parent registers a 55% decline.
For the first time in more than a quarter century, Maruti Suzuki, the Indian subsidiary of Suzuki, posted higher revenues from the US than that of the Japanese car-maker during the last financial year.
Between April 2008 and March 2009, when automobile giants across the globe witnessed a drastic fall in demand, Maruti Suzuki posted a revenue growth of 10 per cent, whereas Suzuki’s North America operation reported a decline of 55 per cent.
According to the audited financial results of Maruti, the company’s income in FY09 stood at Rs 23,085 crore as against Rs 10,000-Rs 11,000 crore (¥ 225,601 million) reported by Suzuki’s North America operation. MSIL had reported revenues of Rs 18,000 crore in 2007-08.
Speaking to Business Standard, Maruti Suzuki India (MSIL) Chairman R C Bhargava said, “Last year, we produced more cars than any other previous years. The US market was down due to a number of reasons, but Maruti posted a growth. Probably this year too, we will see the same pattern... So far in the current quarter, we have seen some revival in demand in India. This will hopefully carry forward as we do not expect any increase in tax rates for the automobile sector.”
Suzuki’s North American operations had reported a revenue fall of 55.6 per cent compared to 2007-08 (when the company posted a total revenue of Rs 21,500-Rs 23,000 crore) on account of reduced sales. Its operating income stood negative at yen 24,143 million (about Rs 1,200 crore).
Suzuki holds a little over 54 per cent stake in MSIL, which is one of the most profitable companies of the Japanese auto major. In May, Maruti’s domestic market share stood at 62 per cent, followed by Korean car-maker Hyundai Motors and Tata Motors.
During FY09, MSIL sold close to 7.92 lakh units, of which 70,000 units were exported. However, when compared to FY08, its sales grew marginally by 3.6 per cent to 7.64 lakh units.
Senior officials of MSIL attribute the increase in revenues to higher realisations from top-selling brands such as Swift and Swift DZire.
In order to keep pace with the demand from domestic and international markets (the company exports models to Europe), MSIL has decided to pump in Rs 1,800 crore in the current financial year to increase its capacity to 1 million cars from less than 900,000 units at present.
Besides, the company is also mulling to shift a major portion of its small car manufacturing activities to India to save on costs and also ease the burden of the parent company, which will focus on bigger cars and alternative fuel options.
India will continue to remain at the centre of Suzuki’s global scheme of things as the Japanese giant has already chalked out some aggressive expansion plans in the export segment in the immediate future.