Maruti's share in Suzuki's sales revenue jumps to a 7-year high

Maruti Suzuki’s contribution to the sales revenue of its Japanese parent, Suzuki Motor Corp (SMC), jumped to a seven-year high in the first half of 2022-23.

Encouraged by the robust operational performance of the India arm, which contributed 55 per cent to its global unit sales, the parent company has revised its earnings and growth outlook for FY23.

The India subsidiary’s contribution to the parent’s revenue increased from 30.2 per cent in H1 2021-22 to 39.1 per cent in the first half of 2022-23 (FY23) owing to high sales of vehicles in India and a favourable foreign exchange rate with respect to the rupee.

The Japanese carmaker has raised its global forecast to more than 3 million units as compared to the previous one of 2.7 million in FY23. This, even as the global outlook remains grim.

“While there is no change in our perception that the risk of global recession is increasing, we have revised the forecast upward to reflect the progress of the first half of the fiscal year and the review of unit sales and the weak yen,” SMC said in an investor presentation.

India was the top-performing market for Suzuki in H1 of FY23, according to the Hamamatsu-based company, which released its H1 results on Tuesday.

Suzuki holds a 56.37 per cent stake in Maruti Suzuki.

Of the unit sales of Suzuki, 55.6 per cent were in India during H1 this year. They were 48.3 per cent in H1 last year.

While Maruti Suzuki’s sales revenue jumped 71.8 per cent to 867.6 billion yen in H1 this year, Suzuki’s revenues increased at a lower rate of 32.5 per cent to 2,217.5 billion yen, the Japanese company’s investor presentation showed.

Suzuki said one rupee was equal to 1.49 yen in H1 of FY22, and this increased to 1.72 yen in H1 of FY23.

As part of the mid-term management plan, Suzuki aims to achieve a market share of 50 per cent or more of passenger cars in India.

Sales revenue increased “mainly owing to improvement in sales mix/price etc, increase in volume mainly in India, and the impact of the exchange rates”, Suzuki noted.

Even in terms of unit sales, the jump in India was the highest in H1 among all the major geographical markets of Suzuki.

Maruti Suzuki’s unit sales jumped 34.4 per cent to 806,000 units in H1 when the home market of Suzuki saw an increase of just 6.1 per cent to 284,000 units, the presentation stated.

Europe, Suzuki’s another major market, observed a huge decrease in unit sales, which stood at 132,000 in H1 last year, decreasing to 74,000 units in the equivalent period this year, the presentation noted.

Suzuki said growth in the utility vehicle (UV) segment in India owing to the introduction of new “Brezza” and new SUV “Grand Vitara” resulted in an increase in unit sales by 34.4 per cent year-on-year.

“Sales in India in the same period last year were affected by limited availability of dealers due to lockdown and production decline due to shortage of parts supply including semiconductors,” it added.

The jump in the exchange rate added 15.5 billion yen to Suzuki’s operating profit of H1, the presentation stated.

During the past several months, almost all currencies have depreciated against the dollar. However, the yen has depreciated more than the rupee, and this helped the Japanese auto major.

Suzuki’s operating profit increased 65.2 per cent to 164.3 billion yen in H1 this year.

Mitul Shah, head of research at Reliance Securities, said Maruti Suzuki’s contribution was steadily increasing in Suzuki’s global sales over the years and this year it had seen a sharp jump as the Indian PV (passenger vehicle) industry recorded double-digit growth. 

“The success of the company’s (Maruti Suzuki’s) new launches and strong order book led to incremental volume for the company, which we expect to continue in H2 of FY23 on strong order books,” Shah added.