Maruti Suzuki banks on SUVs, CNG models to beat demand blues

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Subscribe to enjoy similar stories. Sport utility vehicles (SUVs) and compressed natural gas (CNG) variants of existing models are currently driving auto demand in India. Maruti Suzuki India Ltd’s September quarter (Q2FY25) results reflect this.

The automaker reported a 20% on-year drop in passenger car sales in the quarter, but SUV sales rose 9%. Notably, rural customers generated most of the demand for SUVs, indicating that the ongoing trend of ‘premiumisation’ is not restricted to urban areas. SUVs now form about 54% of the total mix in rural areas, where Maruti Suzuki company plans to expand its premium Nexa outlets.

Also read: Bharti Airtel widens lead over Jio on Arpu, but lags in revenue market share Unlike its rivals, Maruti has no plans to launch new SUV models in FY25. Investors can thus expect stiff competition to weigh on its SUV market share of 26%. The carmaker’s overall market share fell 50 basis points (bps) to 40.3% in Q2 as it struggled to attract customers for its entry-level hatchbacks and sedans.

Deeper discounts and limited-edition launches during the quarter did not help. Maruti’s revenue was flat year-on-year at ₹37,200 crore. The average discount per vehicle was ₹29,300 in Q2 versus ₹21,700 in Q1.

Higher marketing expenditure and firm raw material costs hurt Q2 profitability, with the Ebitda margin shrinking 100 bps year-on-year to 11.9%, missing analysts estimates by 80 bps. Management estimates 14% on-year growth in the festive season, from Shraddh to Diwali. By the end of the festive season, network inventory is expected to drop to about 30 days.