Suzuki Motors Witness 31 per cent hike in the net profit

Japanese automobile company Suzuki Motors witnessed a 31 per cent hike in the net profit in the third Quarter. Its Indian subsidiary Maruti Suzuki India Ltd has contributed majorly towards the net profit. Compared to its domestic rivals Maruati has always enjoyed robust earnings and growth.

Suzuki's shares have been affected by the low margins in India due to hike in the raw materials prices and slowing growth in the country's car market. According to the reports in the October-December third quarter, Suzuki's operating was measured at 23.64 billion yen ($287.7 million), up 31 per cent from 17.99 billion yen a year earlier. The consolidated net profit was quoted at 12.2 billion yen from 3.0 billion yen last year. The company is likely to earn a net profit of 100 billion yen by the end of the year.

Senior Operating Officer Takao Hirosawa mentioned that the company follows a practice of reveiwing the business in every 6 months and this time the company so far has not revised the forecasts. He further added that the net profit for the nine months through December 31, was 92.46 billion yen.

It is being speculated that with the entry of automakers like Toyota Motor Corp and Nissan Motor Corp in the India's low priced car segments last year with Etios and Micra models , the company is under high pressure. Analysts expect a slowdown in the India auto sales growth by 12 to 15 per cent in 2011. Reason being, the rise in fuel rates and the interest rates, shooting up the rates of the cars.

If the rumours are to believed,Suzuki is aware of the competition around it. Suzuki Chief Executive Osamu Suzuki has singled out the recent model Etios launched by Toyota as a “wonderfull car”. Toyota is all geared up to launch another hatchback by April in the market. Toyota is a aiming high by launching a new hatchback and is also expecting to double its sales this year. Maruti Suzuki on the other hand is all set to move into the higher end car segment. Maruti has already taken its first step towards that with the launch of the sedan Kizashi last week. Maruti Kizashi is priced at whooping $36.0000 giving straight competition to its rival Toyota Corolloa, Volkswagen's Jetta, General Motors's Chevrolet Optra and others. There was a dip in the net profit in the third quarter by 18 per cent due to the higher royality payouts and rising input costs weighed on margins.

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