BackRe-ignition trouble at Maruti Suzuki
India’s top car maker has reported its first quarterly loss since the company’s stock was listed for public trading in 2003. It’s a reflection of the covid gloom that hangs over our economy.
PremiumMaruti Suzuki on Wednesday reported a ₹249 crore loss in the first quarter of 2020-21. This is no surprise. Car showrooms had their shutters down for much of this period, while assembly lines were forced to a halt by the covid lockdown imposed just before the financial year began; our “unlock" has been a gradual affair, and the market for vehicles could hardly be expected not to suffer re-ignition trouble. Yet, one can’t help but take notice. Reportedly, this is Maruti’s first loss since the company went public in 2003.
If this is the state of the market leader—every second car that’s bought in India bears the Maruti badge—the pressure on its smaller competitors could be far greater. This portends badly for the automobile sector and the country’s economy as a whole. Since this sector forms a significant chunk of the country’s manufacturing output, a weak performance drags various economic indicators down.
Unfortunately, the outlook isn’t looking any brighter, even though restrictions on car production and sales have largely been lifted. Workers are back at shop floors, and conveyor belts are running again, but customers are not returning to showrooms in large enough numbers. This is probably a reflection of the hard times people have fallen on. New launches could attract interest, as automakers hope, but so long as the economy is in such bad shape, a robust revival of sales cannot be counted upon. Consumer confidence needs to come back, and that’s looking like a long haul.
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