BackSuzuki Motor second quarter profit falls 14% as tax hike hurts
Operating profit at Japan's fourth-biggest auto maker fell 14% to 39.6 billion yen in the second quarter
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Tokyo:Suzuki Motor Corp. said on Thursday that operating profit fell for the first time in eight quarters in July-September, as sluggish demand in Japan following an April sales tax hike continued to fan fierce, profit-eroding competition.
Operating profit at Japan’s fourth-biggest auto maker fell 14% to ¥39.6 billion ($346.55 million) in the second quarter, far short of the ¥ 47.1 billion mean estimate of 12 analysts polled by Thomson Reuters, also hit by a tough market in Southeast Asia.
The result was in line with the ¥ 40 billion profit reported last month by the Nikkei business daily, which cited severe competition particularly in the minivehicle segment, which Suzuki dominates with Daihatsu Motor Co.
Minivehicles, with engine sizes of 660cc, are under consideration in Japan for a tax increase next April.
“I can’t help but say that the outlook for minivehicles is very bleak," chief executive officer (CEO) Osamu Suzuki told a news conference.
Suzuki, whose subsidiary Maruti Suzuki India Ltd sells almost every other car in India, kept its typically conservative operating profit guidance at ¥188 billion for the full business year ending 31 March.
Maruti Suzuki last week beat analyst estimates with a 29% rise in quarterly net profit, but said growth in car sales would slow in the second half of the year.
In Japan, a sales rush before the tax hike and subsequent demand decline has led to increased competition and prompted Toyota Motor Corp. and Honda Motor Co. to lower their domestic sales forecasts.
Shares in Suzuki ended down 1.2% before the earnings results, while Tokyo’s benchmark Nikkei average lost 0.9%. Reuters
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