Maruti Suzuki to focus on SUV segment; says H2 looking uncertain due to semiconductor shortage

Shashank Srivastava, executive director of marketing and sales at Maruti Suzuki, on Thursday, said that things are progressing upwards but it’s still uncertain as to when they will normalise. Srivastava also said that the second half of the year (H2) looks uncertain right now because of semiconductor shortage.

Maruti Suzuki on Wednesday, October 27, reported a standalone net profit of Rs 475.3 crore for the quarter ended September 30, missing Street estimates. The net profit was down 65.3 percent on a year-on-year basis. The country's largest carmaker posted standalone revenue of Rs 20,538.9 crore for the three-month period. Maruti Suzuki's earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 55.8 percent to Rs 854.8 crore in the July-September period. Its EBITDA margin dropped to 4.2 percent in the three months to September 30, from 10.3 percent in the corresponding period a year ago.

“H2 looks a little uncertain at this time because of semiconductor issue, which is not yet clear. Although things are getting better,” Srivastava said, in an interview to CNBC-TV18.

On production, he said, “We had announced in September to the stock exchange, that production will be 60 percent of our plan and in October, 40 percent of our plan. I think November will be better. So things are progressing upwards but I am still uncertain about when they will normalise and that’s why to make a prediction for H2 might be difficult.”

According to him, the September price hike effect will be felt in Q3. “We have taken a couple of price hikes. In the first week of September, we took a hike of about 1.9 percent and the effect of which will be seen in Q3,” said Srivastava.

He further said that the company did not take price hikes earlier as it was conscious of the demand situation.

However, he said, the company is watching the situation very closely for future price hikes. “There has been some softening in precious metals like rhodium, palladium, platinum and also steel, but the reason for that could be lower production of automotive across the world because of the chip shortage. However, it’s possible that they may firm up again, but Q2 saw the peak of the negative effect of raw material cost hikes,” Srivastava said.

On market share, Srivastava said, “Sports utility vehicle (SUV) is the segment where our market share is low, about 13 percent and that’s the area we need to focus on.”

For the entire management interview, watch the video