Maruti's share in parent Suzuki's revenues reached highest ever in Q1FY24

Contribution rose to 39% in Q1FY24 from 35.28% a year ago

Maruti Suzuki’s contribution to the sales revenue of its Japanese parent company, Suzuki Motor Corp (SMC), reached an all-time high in the April-June quarter of 2023-24 (Q1FY24).
 

According to SMC’s results announced on Friday, Maruti’s share in its global revenues rose to 39 per cent in the first quarter, up from 35.38 per cent in the corresponding period of FY23 and 28.7 per cent in Q1FY17.
 

Maruti’s contribution to SMC’s revenues has increased as sales in Indonesia, Pakistan, Thailand, and Europe have underperformed in recent years, mainly due to economic downturns in these key markets.

The Indian economy, on the other hand, has performed robustly, with automobile sales remaining strong. Passenger vehicle (PV) sales in India surged by 9.4 per cent year-on-year (Y-o-Y) to 995,974 units in the first quarter of FY24, according to data from the Society of Indian Automobile Manufacturers (Siam). However, Maruti’s volume share in the Indian PV market has been declining over the last few years.

India’s leading carmaker’s volume share dropped to 41.29 per cent in FY23, down from 47.37 per cent in FY17, the Siam data showed.
 

The company’s volume share in the Indian market has suffered in recent years due to its delayed entry into the rapidly growing sport utility vehicle (SUV) segment. Hisashi Takeuchi, Maruti’s managing director and CEO, conceded in January that the company had underestimated the rate of growth of the SUV segment in India.
 

So far in 2023, Maruti has launched two SUVs — the Jimny and the Fronx. In July, the company outperformed Mahindra & Mahindra to secure the top spot in the SUV market in terms of volume sales.
 

Puneet Gupta, Director - Mobility, S&P Global told Business Standard that Maruti's share in the Indian PV market is now aggressively picking up due to its focus on the SUV (Jimny, Fronx, Vitara and Brezza) and the multi-purpose vehicle (Invicto) segments. 

SMC stated on Friday “Maruti's unit sales grew by 11 per cent in Q1 Y-o-Y, thanks to the launch of new SUVs,” SMC said on Friday. The company expects Maruti’s volume sales in FY24 to surpass the growth of the Indian PV market, which is projected to be between 5 and 7 per cent.
 

“SMC’s net sales increased to 1,208.9 billion yen (Rs 70,144 crore at the current exchange rate), up 145.5 billion yen (Rs 8,442 crore) from the previous year, thanks to increased sales in India, Europe, and Japan.

Of this increase, the foreign exchange impact was 12 billion yen (Rs 696 crore), and the volume change contributed an additional 63.4 billion yen (Rs 3,679 crore),” SMC noted in an investor presentation.
 

SMC's consolidated net profit jumped by 15.1 per cent y-o-y to 67.1 billion yen (Rs 3,903 crore) in Q1 of this fiscal year.
 

Earlier this week, Maruti reported its Q1FY24 results, announcing a more than twofold surge in consolidated net profit at Rs 2,525 crore.
 

On Monday, Maruti Suzuki India Limited revealed its plans to acquire the Gujarat plant from SMC to enhance its production efficiency.

The company expects to complete the transaction by March 31, 2024. The plant, operated by Suzuki Motor Gujarat Private Limited (SMG) — an SMC subsidiary — has been producing vehicles such as the Baleno, Swift, Dzire, and Fronx for Maruti under a contract manufacturing agreement signed in 2015.
 

SMC holds approximately 56 per cent stake in Maruti Suzuki India. Maruti is set to launch its first electric vehicle in this fiscal year from the Gujarat plant.