Suzuki's Q1 FY20 profit down 46% as sluggish Indian market hurts
05 August 2019
Japan’s Suzuki Motor Corp has reported a 46.2 per cent fall in first-quarter operating profit, hurt by lower output at home as it improves its inspection systems, and falling demand in India, its biggest market.
Japan’s fourth-largest automaker posted an operating profit of 62.7 billion yen ($592 million) for the April-June quarter, down from 116.5 billion yen a year earlier.
Suzuki’s Indian outfit, Maruti Suzuki India Ltd, which is India`s biggest automaker, said it had cut the number of its temporary workers amidst a slowdown in auto sales, adding to the jobless problem in Asia`s third largest economy. The vehicle industry, accounting for nearly half of India`s manufacturing output, is facing one of its worst slowdowns in nearly a decade, with vehicle sales falling rapidly.
A Reuters report citing an email from Maruti Suzuki said it employed 18,845 temporary workers on average in the six months ended 30 June, down 6 per cent or 1,181 from the same period last year. The company also said it is working on a single shift as demand for vehicles plummet.
Suzuki reaffirmed its forecast for full-year operating profit to come in at 330 billion yen, up 1.7 per cent from the year ended March 2019.
Maruti Suzuki, majority-owned by Japan`s Suzuki Motor Corp, said it had not reduced its 15,892-strong more permanent workforce. It declined to say whether further reductions were planned or comment on the hiring freeze.
The automaker previously said it had cut production by 10.3 per cent in the first six months of the year.
Maruti Suzuki, which accounts for nearly 50 per cent of the passenger vehicles sold in India, reported a 33.5 per cent decline in sales in July to 109,265 vehicles compared with July 2018.
Suzuki, which sells the Swift and Baleno compact models, is bracing for subdued growth this year in India amidst a churning of the market.
Slowing sales and profit could, in turn, deter the company from investing in and developing lower-emission vehicles. Suzuki has been holding off from developing electric vehicles and self-driving cars on its own. Instead, it has turned to Toyota Motor Corp to supply Suzuki vehicles with its gasoline hybrid systems.
A report in The Economic Times said the car maker is planning to reduce production even at its main plant at Manesar after it pared output in the Gujarat and Gurugram plants.
The Manesar plant accounts for 750,000 unit production of Maruti's Baleno, Ertiga, Swift, Dzire and WagonR cars.