India's largest carmaker Maruti Suzuki reported on Oct. 25 that its quarterly net profit had soared 93% year-on-year, amid signs pointing to a reviving domestic economy.
Maruti, majority owned by Japan's Suzuki Motor Corp, reported net profit of 5.7 billion rupees (US$123 million)in the second financial quarter to September 30. Net sales jumped 47% to 70.5 billion rupees.
The car manufacturer attributed the profit increase partly to government stimulus measures aimed at boosting a slowing economy that have put more money into the hands of India's increasingly affluent middle class.
The company also attributed the rise in sales to aggressive monetary easing by India's central bank to help shield the economy from the impact of the global financial crisis that has made consumer loan costs cheaper. Nearly four-fifths of cars in India are purchased using loans.
The company, which holds 55% of the passenger car market, said it "remains cautiously optimistic" on sales volumes in the near future.
It added operating margins may come under pressure due to rising input costs from firming commodity prices but that it would continue to focus on cost-cutting.
Domestic car sales grew by 22% to 209,083 units in the three-month period from a year ago.
Exports also contributed to the strong growth, riding on stimulus packages by European governments, the company said. India's car exports have been buoyed by incentives in major European markets to scrap old vehicles in exchange for new ones, a scheme aimed primarily at shoring up European automakers. However, these incentives are expected to wind up soon, making the export market more challenging for Indian carmakers.
The strongest domestic growth in India is in the small car segment.
Copyright Agence France-Presse, 2009