MARUTI FY13 NUMBERS - REFLECTS INDEED THE WAY OF LIFE!

By Ruma Dubey

Maruti Suzuki sprung a fantastic surprise on one and all, with Q4FY13 net profit on a YoY sprinting up by 80% at Rs.1147 crore.  Marketmen enthused, celebrated by driving the stock price to a new 52-week high at Rs.1690, with its life time high being at Rs.1740.

The company stated that this exuberant performance for the quarter was on the back of good sales from Ertiga, Dzire and Swift.  But interestingly, it sold 4.6% lesser total vehicles during the quarter. Clearly, higher realization from these models is accelerating the bottomline.

Till a year or two ago, the sales of Maruti continued to be driven by compact cars, especially WagonR. But today the entire consumer preference seems to have shifted.  A look at the sales figures from April’12 to end of March 2013 shows that sales of passenger cars, which comprises of Maruti 800, Alto, A-Atar and WagonR was down 12.6% (YoY).  The biggest drop was in its mid-size passenger car, where there is only one model - SX4, which reported a 62.7% drop in sales. Its executive passenger car, Kizashi also dropped 59%.

The highest surge in sales was reported by the utility car segment, with models like Gypsy, Grand Vitara and Ertiga, which showed a fantastic 1113.7% jump in sales till end of March. An over 1000% jump in sales when everyone is beating their chest, crying that the Indian auto sector has slowed down?

The other car to report great growth was Dzire, which reported a 54% jump in sales. The other brands – Swift, Estrilo and Ritz showed a modest 8.3% jump.

These sales numbers of Maurti, the largest car seller in India, essentially reflects the changing buying pattern of the Indian consumer. These numbers today indicate that India is no longer just a ‘small car’ country. There is now a general sense of well-being and the teeming middle class has money, which is why this surge in buying cars in the price range of Rs.6 to 10 lakh.  The rising demand for utility vehicles is indeed an eye opener, the refelction of changing times and changing priorities.

What we  could be seeing is a churn in the buying pattern. People who had bought their first cars - majority would have opted for a small car, like a WagonR. And then the 'replacement' car  - people have opted for a bigger and costlier car like either Dzire or Ertiga. We talk about rising fuel prices and how people might curtail buying cars but looking at these numbers of Maruti, it looks like people have learnt to live with the high fuel prices and are instead going in for more premium cars.

Another insight – the entry level car segment, which comprises models of Maruti 800, Alto have shown a drop, which means that for entry level customers, the first time car buyers, times are indeed trying. Demand for these cars have gone down because people at this income level have simply put off buying a car now or are waiting for interest rates to come down.  Mind you, for Maruti, a comparison within itself shows a drop in sales of these ‘affordable’ cars but in the overall industry, these entry level cars continue to ride the crest and remain market leaders. 

When a market leader announces numbers, it comes forth more as a reflection of the entire sector. By spreading its basket of cars across all segments, the company has claimed leadership in almost all, like having a dish which suits every palette. Maruti remains the market leader, there is no doubt about that. This is again the faith of the people – the better fuel efficiency, the lower cost of maintenance and easy access to service centers which continues to make  Maruti the most trusted car company of India.