New models give leg up to Maruti

While the country’s largest car maker Maruti Suzuki’s shift towards new launches has fuelled its growth rates, there has been a simultaneous increase in the import content due to a change in the product mix.

A higher offtake of new models has caused a higher royalty payout to Japanese parent Suzuki — 2.5% of net sales as against 2.1% last year. At a time when all the carmakers are posting negative growth rates and the passenger car industry grew by a mere 13%, Maruti Suzuki grew by 18% on the back of new models — Swift (diesel), SX4, Zen Estilo and WagonR (LPG combined).

Given the competitive nature of the market, analysts, however, indicate that higher raw materials and components costs may put pressure on margins.

“While Maruti Suzuki will maintain its margins in the range of 13%, the incremental cost pressure will be offset by productivity gains from the company’s new plant,” said Mr Ramnath S of the brokerage IDFC SSKI Securities.

Although the firm’s warhorse, the Maruti 800, has seen sales slowing by 15% at 44,795 units for the April-November period, its new launches have shown good growth rates. Within the Swift model, the diesel and the recent 1.2 litre have contributed to MSL’s growth.

The Wagon R was a slow mover, but after having recently equipped the Wagon R with a LPG kit, sales volumes have gone up. The Alto, one of the older models, still manages to grow at 3% at 1.49 lakh units.

Courtesy:economictimes.indiatimes.com
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