SUV Demand Helps Shield Maruti Suzuki From Worst of Cash Crunch

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  • Automaker’s compact utility vehicle deliveries surged 88%
  • Introduction of higher-priced models helps boost profit

Maruti Suzuki India Ltd. reported third-quarter profit climbed 47 percent as India’s biggest automaker increased its share of sales of sport utility vehicles, a more affluent market segment that better weathered the cash crunch affecting predominantly the country’s poor.

Net income climbed to 17.4 billion rupees ($255 million) in the quarter ended Dec. 31, in line with analysts’ estimates and up from 11.8 billion rupees a year earlier, the New Delhi-based unit of Suzuki Motor Corp. said in a statement Wednesday. Revenue increased 13 percent to 191.7 billion rupees, exceeding analyst estimates.

The gain in profit is powered by sales of more lucrative and expensive SUVs, part of a strategy by India’s biggest automaker to increase the offerings of higher-priced models. While many first-time buyers have postponed their purchases of small cars amid the cash crunch, sales of compact sport utility vehicles have surged as existing auto owners upgraded.

Maruti’s deliveries in the quarter climbed 3.9 percent, compared with a 0.6 percent gain in industrywide sales, according to data from the Society of Indian Automobile Manufacturers. The automaker’s utility vehicle sales surged 88 percent, while passenger car deliveries declined 2.8 percent. Prime Minister Narendra Modi in November withdrew old high-denomination banknotes in the country’s biggest crackdown against corruption and unaccounted wealth that triggered a cash crunch in the country.

Shares of Maruti rose 0.8 percent to 5,785.65 rupees in Mumbai as of 1:40 p.m., in line with the benchmark S&P BSE Sensex Index’s gain.