NEW DELHI: Maruti Suzuki India is likely to report on Wednesday its first ever quarterly loss in more than a decade, owing to the adverse impact of the Covid-19 related disruptions.
According to ICICI Securities, Maruti is expected to report a net loss of around ₹380 crore as result of 82% year-on-year decline in revenue. The company is also expected to report an operating loss of ₹310 crore as result of high fixed cost compared to the year ago period.
Vehicle manufacturers like Maruti had to close their factories and showrooms from March 22, following the lock down announced by the Union and state governments to contain the spread of the Covid-19 pandemic. The company though in the meantime worked with its suppliers and dealers to create standard operating procedures (SOPs) that needed to be followed once manufacturing and retail operations started.
In April, the company couldn’t manufacture or sell vehicles due to the nationwide lockdown in place.
After resuming production on May 12 at its Manesar factory in Haryana, the company reported wholesale of just 13,865 units during the month. Factory dispatches improved significantly to 51,274 units in June as demand for its entry-level vehicles started picking up.
“The auto industry saw slump in wholesale dispatches due to the nationwide lockdown leading to no production and sales for first six weeks of Q1FY21 and restricted activity for the latter part of the quarter. During the quarter, we witnessed that retail demand trends remain modest due to lack of regular business activity in containment zones, which accounted for one third of the sales," said analysts of ICICI Securities in a note.
Investors are optimistic that Maruti will benefit from a shift in demand towards the more affordable small cars as incomes squeeze and faster recovery in rural areas leads to demand coming back.