PUNE: Hit by subdued demand in the Indian passenger car market, Maruti Suzuki, India’s biggest car maker, on Thursday reported a massive 39.4 per cent year-on-year drop in net profit for the September quarter at Rs 1,358.60 crore due to weak auto sales amid subdued demand in the economy. The Delhi-based maker of popular models like Vitara Brezza and Baleno had clocked Rs 2,240.4 crore in profit in the same period in 2018.
A sharp fall in corporate tax expenses (as the company enjoyed the maximum benefits because of the corporate tax rate cut announced by the government in September) and higher other income helped the company limit the profit decline.
“Net profit fell on account of lower sales volume, higher sales promotion expenses and higher depreciation expenses, partially offset by cost reduction efforts, higher fair value gains on invested surplus and reduction in corporate tax rate,” Maruti said in a BSE filing.
The revenue during the quarter dropped 24.3 percent year-on-year to Rs 16,985.3 crore as volumes fell 30 per cent year-on-year. “This year, the automobile industry has seen a significant decline in sales owing to several factors,” Maruti said.
“One of the main factors is increase in the cost of acquisition of the car due to various reasons coming together like implementation of more stringent safety and emission (BS6) norms, increase in vehicle insurance expenses and hike in road taxes in many states. the company explained.