Maruti Suzuki announces their Financial Reaults also announces phasing out Diesel variants from April 2020

Maruti Suzuki India’s numero uno car maker has released their Financial Results for 2019-19 and Q4 (Jan-April 2019) today.

Maruti Suzuki has sold a total of 1,753,700 units in the domestic market with a growth of 6.1%. This comprised 1,729,826 units in the passenger vehicle segment with a growth of 5.3% and 23,874 units of LCV, a growth of 138% over previous year. 108,749 units were exported by the company.

Maruti Suzuki’s Total Sales in the year stood at 1,862,449 vehicles with a growth of 4.7%. The Company’s net sales stood at Rs 830,265 million in FY 2018-19, a growth of 6.3% over the same period previous year. Net profit for the year stood at Rs 75,006 million, lower by 2.9% compared to the same period previous year.

The company also stated that this was a difficult year because of adverse foreign exchange rates and increase in commodity prices. The second SMG plant in Gujarat was commissioned leading to a higher depreciation expense. The overall market was slow and had to be supported by higher sales promotion expenses. This was partially offset by cost reduction efforts.

For the Q4 of 2019 the Company sold a total of 428,863 units in the domestic market, a growth of 0.4%. Total Sales in the quarter stood at 458,479 vehicles, a decline of 0.7%. During the Quarter, the Company registered Net Sales of Rs. 207,375 million, up by 0.7% over the same period previous year.

Maruti Suzuki has also hiked the prices of the Baleno Diesel range and the Baleno RS by upto ₹15,000.

Also in A major announcement made by Maruti Suzuki the company has said they will phase out the diesel variants of its models from 31st March 2020. The BS VI norms come into effect from 1st April 2020. The company has also said that for the newly introduced 1.5L Diesel engine the company will decide if they will convert it to BS VI as per customer demands. Currently the Diesel lineup for Maruti Suzuki is powered mainly by the 1.3L DDiS engine and the newly in-house developed 1.5L unit that powers the Ciaz currently. The Petrol engines are already BS VI ready.

R. C. Bhargava, Chairman Maruti Suzuki India said, “Any vehicle is phased out if the assessment is that it will not sell. The conversion cost of a BS4 to BS6 diesel car has a certain amount of money involved, which is quite significant. If you do that on a small diesel car, the percentage increase in the selling price of the car becomes significant. Now the viability of such a car also depends on the relative prices of petrol and diesel. If the gap between the two is large then customers will pay a higher price for a diesel vehicle, because overall it works out. But, if the gap between petrol and diesel is small, then it doesn’t work unless you drive 5000 km a month which very few people do. So today the gap is very low, and with the price increase which is involved in the conversion to BS6, and the petrol-diesel price, our assessment is it’s not going to be a viable product, which customers will buy.”

Maruti Suzuki will also stop manufacturing BS IV Diesel engines by end of 2019. Maruti Suzuki manufactures 14 models currently in India, seven of these have diesel variants namely the Swift, Baleno, DZire, Ertiga, Vitara Brezza, S-Cross, and Ciaz. The Vitara Brezza and the S-Cross are only available in Diesel for now.

The Diesel engine make about 30% of the total
Sales for Maruti Suzuki and it would be interesting to see how the largest car maker of the country gets this one correct.