Maruti Suzuki India misses quarterly profit estimates as costs rise

Maruti Suzuki India’s largest carmaker, reported second-quarter profit below estimates on Friday as higher input costs and expenses weighed on margins.

The Brezza SUV manufacturer’s standalone profit rose 7.3% to 32.9 billion rupees ($374.31 million) in July-September, falling short of analysts’ expectations of 35.93 billion rupees, according to data compiled by LSEG.

Maruti, majority-owned by Japan’s Suzuki Motor 7269.T, dominates India’s mass-market segment but has been grappling with high prices and tighter financing that have hurt demand for small cars.

Its total expenses rose 15.4% year-on-year to 387.63 billion rupees, compared to a 1.4% rise last year.

The company reported an operating earnings before interest and taxes margin of 8.5% in the quarter, down from 10.3% a year ago.

The decline was driven by higher commodity prices and advertising, sales promotion costs, as well as expenses from a new plant, the company said.

Suzuki aims to reclaim India market share with SUVs, expanded production

For the quarter, total domestic sales - including those to other manufacturers - for the Swift-maker fell 5.1% to 440,387 units, while exports jumped 42.2% to 110,487 units.

Domestic sales fell as buyers delayed purchases, expecting tax-driven price cuts from September 22.

In September, India simplified its tax structure, a move that is expected to give a lift to automakers as lower tax on small cars could attract price-sensitive buyers and revive demand in a segment that has been under strain.

Maruti has been expanding its SUV lineup to defend market share against Hyundai India, Tata Motors and MG Motor.

Shares of the firm turned negative and fell as much as 1.6% after the results.