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Profit expectation for the year changed substantially: Maruti after Q2 plunge

Maruti Suzuki is reeling under the stress of chip shortages and rising commodity prices as the carmaker’s profit took a massive plunge in the September quarter

Profit after tax (PAT) fell by almost 65% from the year-ago period amid pressure from the rising prices of commodities such as steel and copper.

Profit expectation for the year has changed substantially due to chip shortage and other issues, a senior Maruti India executive has said in a post earnings call.

The New Delhi-headquartered company has been under pressure from the rising prices of commodities. It has tried to preserve its margins by passing on rising costs to its customers, having bumped up the prices of its cars four times this year.

And also, carmakers have been forced to make sharp production cuts this year as supply chain disruptions and booming demand for consumer electronics have led to an acute shortage of chips, which have become a critical component in automobiles, powering everything from fuel injection to entertainment systems.

Export growth is strong, especially in the african markets where there is support from partner Toyota, the executive said.

India’s largest carmaker said it has lost almost a month of production during the second quarter due to chip shortage. Production to improve in October and November, but not sure if the chip supply will regularise after a few months.

On the green front, a Maruti executive has said the company expects to launch EVs before 2025 and maybe sooner depending on hoe vehicle prices, charging infrastructure develops

The company said it saw no impact so far of high fuel prices on car demand.

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