New Delhi: Maruti Suzuki India Ltd., which sells every other car on Indian roads, posted its first quarterly loss on record as a nationwide lockdown to curb the coronavirus pandemic stopped people from visiting showrooms.
The local unit of Japan’s Suzuki Motor Corp. lost 2.5 billion rupees ($33 million) in the three months ended June 30, it said in a statement Wednesday. Analysts estimated a loss of 3.4 billion rupees, and Maruti’s profit a year earlier was 14.4 billion rupees.
Key insights:
- Maruti, known for its inexpensive vehicles, faces an uphill battle to revive demand as the virus wreaks havoc in India. The company said production for the entire three months ended June was equivalent of just about two weeks of regular working due to safety protocols.
- The company has said that car sales may boom after the virus-related restrictions are lifted, with social distancing becoming a common practice. Analysts expect the company to emerge stronger after the outbreak, as the economic crunch will lead to buyers favoring cheaper hatchbacks.
- India’s automobile market is going through its worst slowdown ever, and an industry group doesn’t expect sales to rebound to pre-crisis levels for at least another four years.
Market reaction:
- Shares of Maruti fell as much as 2.6% on Wednesday in Mumbai. They have lost about 16% this year.-Bloomberg
Also read: Slump in June car sales shows pain persists for Indian economy