Maruti profit declines as rates hurt car sales

Maruti profit declines as rates hurt car sales

Mumbai: Maruti Suzuki India Ltd, maker of half the cars sold in the country, reported its smallest quarterly profit in three years after costlier auto loans and higher inflation hurt vehicle sales. The stock plunged.

Net profit in the three months ended 30 September, fell a worse-than-expected 37% to Rs296 crore, the Indian unit of Suzuki Motor Corp. said in a statement. That was the smallest profit since September 2005. Revenue grew marginally to Rs4,806 crore, from Rs4,547 crore in the September quarter last year.

Vehicle sales declined 1% as the fastest inflation in 16 years and seven-year high interest rates curbed spending in Asia’s third largest economy. India’s car sales fell for the first time in two-and-a-half years in July and August as the economy slowed.

“The overall environment has been pretty tough for the auto industry," said S. Ramnath, an analyst at IDFC-SSKI Securities Pvt. Ltd, who rates Maruti “outperform". “Banks are still cash-strapped, the stock market is crashing and the sentiment is still down. The customer is not going to come back soon."

The Maruti stock plunged as much as 9.6% to Rs538.25 on the National Stock Exchange. The stock has declined 47% so far this year.

Maruti’s depreciation of investments in new factories and other facilities almost doubled to Rs166 crore in the last quarter.