Maruti Suzuki reports 48% drop in Q3 profit amid chip crisis, high input cost

Maruti Suzuki's profit came down to 10.11 billion rupees ($135.43 million) for the three months ended December 31 as compared with 19.41 billion rupee
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Maruti Suzuki produced an estimated 90,000 units less due to the supply shortage during third quarter. (MINT_PRINT)
Maruti Suzuki produced an estimated 90,000 units less due to the supply shortage during third quarter.

Maruti Suzuki on Tuesday reported a 48% drop in its third-quarter net profit due to the ongoing global chip shortage that slowed production and high raw material costs that have squeezed margins. However, demand remains strong as the carmaker had more than 240,000 pending customer orders at the end of the third quarter.

Maruti produced an estimated 90,000 units less due to the supply shortage. “Production was constrained by a global shortage in the supply of electronic components," the company said in a statement. The compant, which sells every second car in India, said its unit sales fell to 430,668 vehicles from 495,897 cars a year earlier.

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Maruti Suzuki's profit came down to 10.11 billion rupees ($135.43 million) for the three months ended December 31 as compared with 19.41 billion rupees a year earlier. This is event lower than 10.58 billion rupees estimated by analysts. The company's total revenue from operations fell 1% to 232.46 billion rupees.

OEMs across the country and the world have had to shutter their plants or operated at reduced capacities during the height of the pandemic. They have found themselves competing against the consumer electronics industry for chips which are a critical component in modern-day vehicles.

Meanwhile, raw material prices and shipping costs have also increased due to supply chain disruptions, affecting profit margins at companies that are looking to recover from the impact of the pandemic. This has forced carmakers to pass on some of these costs to customers.

Maruti hiked prices of its vehicles at least four times last year. The company's latest price hike was announced earlier this month by up to 4.3 per cent. The carmaker attributed this to the rise in input costs, the impact of which it wants to partially set off. The prices have been hikes across the portfolio in the range of 0.1 per cent to 4.3 per cent.

(with inputs from Reuters)

First Published Date: 25 Jan 2022, 15:20 PM IST
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