Maruti Suzuki says chip shortage hit Q2 profits, while company chairman reveals when to expect its electric vehicle

Maruti Suzuki India: While Chip Shortage Hits Q2 Profits, Company Chairman Reveals When To Expect Its Electric Vehicle

by Bhaswati Guha Majumder - Oct 28, 2021 06:59 PM +05:30 IST
Maruti Suzuki India: While Chip Shortage Hits Q2 Profits, Company Chairman Reveals When To Expect Its Electric VehicleMaruti Suzuki (Representative Image) (Photo by Pradeep Gaur/Mint via Getty Images)
  • Due to the scarcity of electronics components, Maruti Suzuki had over 200,000 pending client orders at the conclusion of Q2.

    Presently, the company is concentrating its efforts on expanding its CNG offerings on its models and does not plan to launch electric vehicles in the country before 2025.

Maruti Suzuki India reported a net profit of Rs 475 crore in the September quarter, down 65 per cent from Rs 1,371 crore in the year-ago period. As reported, profit was reduced by decreased sales volume due to chip shortages, which resulted in lower capacity utilisation.

Increasing commodity prices, such as steel and copper, have put pressure on the corporation. It has increased the prices of its cars four times this year in an attempt to retain its profits by passing on higher costs to its customers.

Maruti's profits before interest, tax, depreciation, and amortisation, were Rs 855 crore, a 56 per cent decrease from the previous year, while margins plummeted to 4.2 per cent. In the second quarter, the company's net revenues were Rs 19,297 crore, up from Rs 17,689 crore the previous year. This represents a 9 per cent increase year on year.

Meanwhile, total revenue from operations climbed by 9 per cent to Rs 20,538 crore, up from Rs 18,744 crore in the previous year.

As reported, the company sold 379,541 vehicles during Q2, hampered by a global scarcity of electronic components. In the domestic market, sales totalled 320,133 units.

A total of 116,000 vehicles were unable to be constructed due to a scarcity of electronics components, the majority of which were for domestic models. At the conclusion of the quarter, the company had over 200,000 pending client orders, for which it is making every effort to accelerate deliveries.

What About The Maruti EV

After the company’s Q2 results came out, Chairman RC Bhargava said on 27 October that Maruti Suzuki India will only launch electric vehicles in the country after 2025 because demand for such vehicles is presently low.

According to him, the company would sell roughly 10,000 units per month when it joins the electric mobility industry.

In a virtual conference call to discuss the company's second-quarter earnings, he said that under the current circumstances, many aspects of the EV ecosystem, such as batteries, charging infrastructure, as well as electric supply, are handled by third parties and thus the costing is out of the company's hands.

Bhargava said: "Unfortunately, we will not feel happy if we can (sell) 300 or 400 or 500 or even 1,000 cars (a month).”

“For some reason, we have gone to, too much, higher volumes and volumes in 100s and even 1,000s, are very good, but they leave us a little unexcited...So we have to see if I start selling EVs I would like to sell maybe 10,000 EVs in a month or something like that," he added.

Bhargava noted that introducing an EV would be dependent on market conditions, and the timing would be determined by its parent company, Suzuki Motor Corporation

As reported, the company is now concentrating its efforts on expanding its CNG offerings on its models. Maruti Suzuki India managing director and CEO Kenichi Ayukawa stated that the business will increase manufacturing of CNG vehicles in order to satisfy demand and that it is also working on plans to offer CNG options in more models in the coming years.

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