UPDATE 3-India’s top carmaker Maruti Suzuki sees demand improve amid virus resurgence

(Recasts to add executive comments from media call, details and background)

By Chandini Monnappa and Aditi Shah

BENGALURU, April 27 (Reuters) – Maruti Suzuki India Ltd said on Tuesday a fresh surge in coronavirus cases in the country would strengthen demand for personal mobility, and that lockdowns in some cities had not yet hurt the carmaker’s sales or production.

Following a steep fall in car sales last year when the pandemic first hit, Maruti’s sales picked up in India over the past two quarters as people opted out of public transport and poured their lockdown-led savings into big-ticket items such as cars.

Still, Maruti’s fourth-quarter results took a hit due to rising commodity prices and supply chain disruptions. Maruti has passed on some of the costs to customers and already bumped up car prices twice this year.

“With this second wave the demand for personal transport will, if anything, strengthen, not weaken. More and more people will want to have their personal transport,” Chairman RC Bhargava told reporters after Maruti posted a near 10% drop in quarterly profit.

Maruti is keeping a close eye on the impact of rising steel prices and government orders limiting the use of oxygen by industries, Bhargava said, adding that this would make it difficult to provide a sales outlook for the current fiscal year, though he expects growth.

Maruti, like other carmakers, is also hurting from a shortage of semiconductor chips, which has forced many carmakers including Volkswagen and General Motors (NYSE:) GM.N to slash production. said he expects the crisis to remain for some time, without providing further details.

Maruti reported an EBITDA margin of 8.3% for the reported quarter, a profitability metric watched closely by analysts. Analysts had expected 9.1%, according to Refinitiv data.

The company’s domestic sales during the fourth quarter rose 26.7% to 456,707 vehicles. The year-ago period faced a significant decline in sales volumes due to lockdowns in India.

($1 = 74.6510 Indian rupees)

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