Lower sales, spate of discounts hurt Maruti Suzuki as Q2 revenue misses estimate

India's top carmaker Maruti Suzuki reported a lower-than-expected second-quarter revenue on Tuesday, weighed down by a double whammy of lower sales and rising discounts, sending its shares 5% lower.

The 'Brezza' SUV manufacturer's standalone revenue from operations rose 0.4% to 372.03 billion rupees ($4.43 billion) for the July-September quarter, while analysts expected it to rise 1.4% to 375.59 billion rupees, per data compiled by LSEG.

Maruti Suzuki's profit, meanwhile, dropped for the first time in nearly three years, largely due to a deferred tax liability of 8.38 billion rupees to account for the government retroactively removing long-term tax benefits for investments before April 2023. However, excluding the deferred tax liability, profit increased year-on-year.

Maruti Suzuki kicks off second-quarter earnings for the world's third-largest car market, where sales to domestic dealers declined for the first time in over two years between July and September.

Lukewarm demand for new cars has forced manufacturers to moderate dispatches to dealers and dish out higher discounts to attract buyers as showroom owners grapple with rising levels of unsold cars.

Maruti's overall sales volumes in the quarter fell 2% year-on-year, hurt by a continued drop in the sales of small cars - its biggest segment - while sales of its high-margin utility vehicles were little changed.

The utility vehicles segment houses the likes of the 'Brezza' SUV and the 'Ertiga' multi-purpose vehicle.

Smaller rivals Hyundai India, Tata Motors, and Mahindra & Mahindra will report their quarterly numbers in the coming weeks.

($1 = 84.0530 Indian rupees)

Get insights into Upcoming Cars In India, Electric Vehicles, Upcoming Bikes in India and cutting-edge technology transforming the automotive landscape.