India’s biggest carmaker Maruti Suzuki said Saturday its quarterly net profit more than tripled as it announced plans to increase capacity to maintain its dominance of the domestic market.
Maruti, majority owned by Japan’s Suzuki Motor Corp, said net profit during the fiscal third quarter soared to 6.88 billion rupees (149 million dollars) from 2.14 billion rupees a year earlier.
The performance, fuelled by cheap loans and a reviving domestic economy, beat analyst expectations that profit for the three months to December would be around 5.8 billion rupees.
“This has been a good quarter,” said Maruti’s chief financial officer Ajay Seth, as he announced the company would expand capacity to defend its market leadership position from global rivals and meet increasing domestic demand.
A host of vehicle makers from General Motors to Renault and Toyota have unveiled plans for car launches in India to grab a larger slice of the fast-growing market and counter sluggish demand in developed countries.
India is now Asia’s third-largest car market, outstripped only by China and Japan, and is one of the few countries where automobile sales are rapidly increasing. Car sales jumped 19 percent last year to 1.43 million units.
Maruti, which sells about one in two cars in the country, said sales jumped 62.5 percent to 73.34 billion rupees.
Seth said Maruti planned to invest 17 billion rupees to make 250,000 more cars each year from April 2012, increasing total capacity from one million units.
The expansion would take place at Maruti’s plant at Manesar near the Indian capital.
Seth said Maruti could further ramp up capacity “if there is a need later.”
The car manufacturer attributed the profit increase partly to government stimulus measures aimed at helping the industry ride out the global economic slump.
The measures have put more money into the hands of India’s growing middle class.
“Favourable conditions in the domestic market supported by the government’s stimulus package and ease of automobile finance helped achieve good sales,” the company said in a statement.
Nearly four-fifths of cars in India are bought using loans.
The central bank has cut interest rates to record lows to cushion the impact of international financial slump.
Maruti’s domestic sales in the quarter jumped by 38 percent to 218,910 units while exports soared by 167 percent to 39,116 vehicles, spurred by European government incentives to scrap ageing vehicles.
Seth said the company was “cautiously optimistic” about sales volumes in the fourth quarter but added rising commodity prices would put pressure on profit margins.
“We also have to keep in mind interest rates may rise (as the domestic economy recovers) and it is important that government incentive measures stay in place” to help keep the market buoyant, he told AFP.
Passenger car sales are forecast to reach two million this year and are expected to triple in the next decade, boosted by higher incomes in the country of 1.2 billion people, according to industry estimates.
