India slowdown weighs heavy on Suzuki Motor Corp's Q1 global performance

Japan’s Suzuki Motor Corporation (SMC) is feeling the pressure of a global slowdown and particularly from India, its largest market. India, clearly, is one of the key triggers for the company's negative growth, which it reported yesterday.

For Q1 FY2020 (April-June 2019), the company’s net income has fallen sharply by 52.8 percent at 40.5 billion yen (Rs 2,673 crore), a decrease the company says it recorded for the "first time in four periods".

During the quarter, SMC reported total global automobile sales of 738,000 units, down 14.4 percent (Q1 FY2019: 862,000) on the back of the sharp decrease in passenger vehicle sales in India, Japan and other markets. Maruti Suzuki India, in Q1 FY2020, sold a total of 363,417 units (-20.82%). Meanwhile, in its home market Japan, SMC sold 167,000 units (-3.8%) and in Europe retailed 75,000 units (0.6%).

India and Access 125 growth drivers for Suzuki 2Wheelers
SMC’s global two-wheeler business saw growth of 6.6 percent at 454,000 units, which was led by India, the Philippines and other markets. Of the global two-wheeler sales, India accounted for 39 percent with 176,668 units (-16.14%) being sold in the country.

Of these 176,668 Suzuki two-wheelers sold in India, the bulk of sales was contributed by the Access 125 scooter that saw sales of 149,243 units or 85 percent, with the balance 18,266 units contributed by the Burgman scooter. The Access 125, which has seen YoY growth of 17 percent and remains a standout performer in the Indian two-wheeler market, which is experiencing tough times.

Forecasts its India sales growth by 4%
In terms of revenue, Maruti Suzuki is easily SMC’s biggest contributor with a sales revenue of 283 billion yen (Rs 18,678 crore), a YoY drop of 52.5 percent. SMC’s two-wheeler business Suzuki Motorcycle India, reported revenues of 15.7 billion yen (Rs 1,036 crore), up 2.9 percent.

SMC says the "slowdown of 20.2 percent (in car sales) was partly owing to impact of hold off on purchasing before the general election in India, which was held from April to May 2019."

In its outlook for the year, Suzuki Motor Corp view the ongoing slowdown as a temporary hiccup and forecasts that its overall automobile sales in India will grow by 4 percent.