Maruti Suzuki India Ltd
NSE:MARUTI
Maruti Suzuki India Ltd
Maruti Suzuki India Ltd., a cornerstone of the Indian automotive sector, is a fascinating tale of industrial evolution and market dominance. Initially established as a cornerstone of India's ambition to modernize its automotive landscape, the company emerged from a partnership between the Indian government and the Japanese automaker Suzuki Motor Corporation. From its inception in the early 1980s, Maruti Suzuki has driven India's vehicular aspirations, swiftly transforming into a leader with its production home in Haryana. Its story is one of adaptation and market mastery, as it deftly identified the burgeoning demand for affordable and fuel-efficient vehicles amidst India's growing middle class. By producing reliable, accessible models such as the Maruti 800, Alto, and Swift, the company captured the hearts and wallets of millions of Indians, becoming synonymous with reliability and economic motoring.
Through a sharp focus on customer preferences and a robust distribution network, Maruti Suzuki has expanded its footprint across urban and rural India. The company operates in symbiosis with its network of manufacturing plants that roll out millions of vehicles annually, while a vast dealership system facilitates widespread accessibility. It is this dual-engine system of manufacturing and sales that fuels its revenue engine. Beyond domestic dominance, Maruti Suzuki also eyes international markets, exporting vehicles to numerous countries across the globe. By continuously investing in technology and expanding its product portfolio to include hybrids and EVs, Maruti Suzuki seeks to navigate the evolving demands for greener transportation solutions. This strategic evolution ensures it remains a formidable player in both the domestic and global automotive markets.
Earnings Calls
In the most recent quarter, Maruti Suzuki achieved record net sales of INR 368 billion, a 15.6% increase, while net profit rose 12.6% to INR 35.25 billion. Sales volume reached 566,213 units, with domestic sales growing 8.7%. Looking ahead, management anticipates a continued retail sales growth of 3.5% in Q4. The company recently launched the new Dzire, which sparked a surge in bookings. Additionally, they are preparing for the eVitara’s production, expected to operate in Q4 FY '25, aiming to be a key player in the EV market with exports targeted to over 100 countries.
Management
Mr. Hisashi Takeuchi is a senior executive with extensive experience in the automotive industry, particularly with Suzuki Motor Corporation. He was appointed as the Managing Director and CEO of Maruti Suzuki India Ltd, one of India's leading automobile manufacturers, beginning from April 2022. Takeuchi has been associated with Suzuki for several decades, joining the company in 1986. Over the years, he has held various key positions, contributing significantly to Suzuki's global operations. Before his appointment at Maruti Suzuki, he served as the Managing Officer in charge of global automobile marketing and the automobile marketing department at Suzuki Motor Corporation. With a deep understanding of the Indian automotive market through previous roles related to India, he has been pivotal in strengthening Maruti Suzuki's leadership position in India’s automotive industry. Under his leadership, the company continues to focus on product innovation, expansion into new segments, and enhancing customer satisfaction. Hisashi Takeuchi brings a wealth of experience and global perspective that is expected to drive Maruti Suzuki’s growth and strategic initiatives, emphasizing sustainable mobility and new technologies.
Kazunari Yamaguchi is a well-respected executive within the automotive industry, specifically with Maruti Suzuki India Ltd. He has held pivotal roles in the company, contributing significantly to its strategic and operational endeavors. As a senior executive, Yamaguchi has been instrumental in bridging the company's global strategies with local execution. His leadership has been essential in fostering technological innovation, enhancing product quality, and improving customer satisfaction. Kazunari Yamaguchi's expertise and vision have been crucial to maintaining and expanding Maruti Suzuki's market leadership in the competitive Indian automotive sector.
Arnab Roy is an accomplished executive and finance professional, known for his tenure as the Chief Financial Officer (CFO) of Maruti Suzuki India Ltd. With a robust background in finance and strategic management, he has played a pivotal role in steering the financial direction of the company. Roy has extensive experience in overseeing financial operations, budgeting, and financial planning, driving growth, and ensuring fiscal prudence. Before joining Maruti Suzuki, he had garnered significant experience in the automotive industry, working with other major companies, which equipped him with a deep understanding of industry dynamics and financial strategies. His leadership has been instrumental in navigating complex financial landscapes and contributing to Maruti Suzuki's continued success and market leadership in the automotive sector.
Rajiv Gandhi is not an executive officer associated with Maruti Suzuki India Ltd. It's possible you may be referring to a different individual or company. If you have more information or if there's another specific executive you want to know about, please provide additional details. Otherwise, this inquiry seems to be based on incorrect or insufficient information about Maruti Suzuki's current executive team.
C. V. Raman is a prominent figure in India's automotive industry, serving as the Chief Technical Officer (CTO) of Maruti Suzuki India Ltd. He joined Maruti Suzuki in 1986 and has been instrumental in various aspects of the company's engineering and development divisions. Raman holds a degree in Mechanical Engineering, which laid the foundation for his extensive career in the automotive sector. Throughout his tenure at Maruti Suzuki, he has played a crucial role in the development of some of the most successful models introduced by the company. He has been deeply involved in the product development processes, focusing on incorporating advanced technologies and ensuring that the vehicles meet customer expectations regarding safety, efficiency, and environmental standards. Raman's leadership has been pivotal in strengthening Maruti Suzuki's position as a leader in the Indian automotive market. Under his guidance, the company has consistently innovated and adapted to changing market demands. Raman is known for his dedication to fostering a culture of innovation within the company, which has helped Maruti Suzuki maintain its competitive edge. His vast experience and technical expertise continue to be assets to the company as it navigates the evolving landscape of the automotive industry.
Rajesh Uppal is a prominent executive associated with Maruti Suzuki India Limited. As a senior leader at the company, he serves as the Member of the Executive Board, Director of Systems, HR, and Finance. Uppal has played a significant role in steering the organization toward technological advancements and operational efficiencies. With a career spanning several decades at Maruti Suzuki, he has been instrumental in integrating innovative IT solutions to streamline processes within the company, ensuring that Maruti Suzuki remains at the forefront of the automotive industry in India. His leadership in human resources and finance has also contributed to the company's strong organizational structure and fiscal health. Uppal’s expertise and forward-thinking approach have been critical in Maruti Suzuki’s efforts to adapt and thrive in the rapidly evolving automotive landscape. As a key figure in the company's strategic planning, he continues to influence its direction and success in the Indian market.
Randhir Singh Kalsi is a prominent figure in the Indian automotive sector, primarily known for his significant contributions to Maruti Suzuki India Ltd. He has served as the Executive Director of Marketing & Sales at Maruti Suzuki, one of India's largest car manufacturers. In this role, Kalsi has been instrumental in shaping the company's marketing strategies and sales operations, helping to maintain its leadership position in the Indian automotive market. With a career spanning several decades at Maruti Suzuki, Kalsi has been involved in various aspects of the business, contributing to its growth and success. His expertise lies in understanding consumer needs and responding with innovative sales strategies and marketing initiatives. As a leader, he has been known for his strategic vision and ability to adapt to the ever-changing automotive landscape, ensuring that Maruti Suzuki stays at the forefront of the industry. Through his leadership, Maruti Suzuki has expanded its portfolio and reinforced its brand presence across India, catering to diverse customer segments and enhancing customer satisfaction. Kalsi's work has been pivotal in driving the company's market share and sustaining its competitive edge in the challenging automotive market.
Rahul Bharti is a notable executive associated with Maruti Suzuki India Ltd., one of the leading automobile manufacturers in India. He serves as the Executive Director, overseeing the Corporate Affairs of the company. In this capacity, Bharti plays a critical role in managing the corporate communications, government relations, and public policy strategies of Maruti Suzuki. His responsibilities include fostering strong relationships with governmental bodies, managing regulatory frameworks, and ensuring that the company's interests are well-represented in policy discussions. Bharti's expertise in corporate strategy and his ability to navigate complex regulatory environments have been essential in positioning Maruti Suzuki as a leader in the Indian automotive market. His leadership in corporate affairs helps guide the company's strategic direction in alignment with both business goals and regulatory requirements. Educated with a background that supports his role in corporate governance and public affairs, Bharti's contributions have been instrumental in enhancing Maruti Suzuki's brand reputation and stakeholder engagement. Under his leadership, the company continues to reinforce its commitment to sustainable practices and innovation within the automotive industry.
Ms. Manjaree Chowdhary serves as the Executive Director and General Counsel at Maruti Suzuki India Ltd. She plays a crucial role in the company's legal and regulatory landscape, advising on diverse matters essential to the company's operations and compliance. With extensive experience in corporate law, Ms. Chowdhary is critical in navigating legal complexities, ensuring that Maruti Suzuki adheres to all applicable laws and regulations. Her expertise helps in shaping the strategic direction of the company, facilitating smoother operations and contributing to its overall success. She has been instrumental in establishing and maintaining high standards of corporate governance within the organization.
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Ladies and gentlemen, good day, and welcome to Maruti Suzuki Q3 FY '25 Earnings Conference Call.
[Operator Instructions]
Please note that this conference is being recorded.
I now hand the conference over to Mr. Pranav from Maruti Suzuki. Thank you, and over to you, sir.
Thank you, [ Sejal. ] Ladies and gentlemen, good afternoon once again. Welcome you all to the Q3 FY '25 Earnings Call. May I introduce you to the management team from Maruti Suzuki. Today, we have with us our Chief Investor Relations Officer, Mr. Rahul Bharti; and CFO, Mr. Arnab Roy.
Before we begin, may I remind you of the safe harbor? We may be making some forward-looking statements that have to be understood in conjunction with uncertainty and the risks that the company faces. I also like to inform you that the call is being recorded, and the audio recording and the transcript will be available on our website.
Please note that in case of any inadvertent error during this live audio call, the transcript will be provided with the corrected information. The con call will begin with a brief statement on the performance and outlook of our business by the Chief Investor Relations Officer and Executive Officer, Corporate Affairs, Mr. Rahul Bharti, after which we'll be happy to receive your questions.
I would now like to invite our CIRO, Mr. Rahul Bharti.
Over to you, sir.
Thank you, Pranav. Good afternoon, ladies and gentlemen, and thank you for joining us. I would start by remembering our beloved leader, Mr. Osamu Suzuki, Senior Adviser, Suzuki Motor Corporation, and Director and Honorary Chairman, Maruti Suzuki, who passed away in December '24.
As you would know, Mr. Suzuki was a visionary leader who made a major contribution to the global automobile industry. In India, his foresight and leadership were instrumental in the formation of our company, Maruti Udyog Limited in '81. With his vision, Mr. Suzuki played a pivotal role in realizing the dream of putting India on wheels by empowering millions of Indian families with affordable, reliable, efficient and good-quality cars. The government of India has posthumously conferred Padma Bhushan on him. This recognition inspires the company to build on his legacy and enhance India auto industry's position in the global arena.
I'll now share some business highlights, followed by the business performance of the company. Coming to business highlights, I'm happy to share that the company unveiled its first electric SUV, the eVitara at the Bharat Mobility Global Expo 2025. Built on a new dedicated ground-up HardTech E platform, the eVitara offers superior performance and excellent range with uncompromised comfort and safety. It comes with highly efficient battery pack option to deliver more than 500 kilometers for 61-kilowatt hour on a single charge. The eVitara is equipped with advanced technology for safety such as 7 airbags as standard across the range, level 2 autonomous driving, next-gen Suzuki Connect with over 60 features and advanced structural design with energy absorbing battery pack mounting structure for enhanced safety.
To increase the adoption of EVs, we have come up with an E-for-Me initiative, which means that if any customer has any doubt whether he should purchase an electric car, we remind him that E is for Me. Our goal is to create electric eco solutions for the customers. We'll offer smart home chargers along with installation support, leverage our vast network to provide fast charging support in the top 100 cities in the first phase and then expand further. The idea is that within these cities, almost every 10 kilometers, a customer should find a charging point by Maruti Suzuki. We are also preparing about 1,500 EV-enabled service workshops covering over 1,000 cities with specially trained manpower and special equipment to address all EV-related support, including charging. Additionally, we'll also provide roadside assistance on a call -- on a phone call all over India.
One of the major highlights of eVitara is its export potential to leverage global economies of scale and concentrate manufacturing at a single location for the world, Maruti Suzuki will be the exclusive manufacturer of this strategic EV, the eVitara for the world. This is expected to be a large volume manufacturing as in addition to domestic sales, it will have OEM sales and exports to about 100 countries, exemplifying the excellence of Make in India. The production of eVitara will begin soon, and the company aspires to be the largest manufacturer of EVs in India within the first year of start of production.
I now come to the all-new Dzire, which we launched in November with unmatched style and unrivaled performance. Crafted with the all-new progressive styling, the all-new Dzire is loaded with a host of segment-first features such as electric sunroof, 360 HD view camera, Suzuki Connect and all-new LED crystal vision headlamps. It is equipped with 15-plus top-of-the-line safety features, including 6 airbags, 3-point ELR seatbelts, electronic stability program with Hill Hold Assist, ABS with EBD, ISOFIX Child Seat anchorages as standard across all variants. The all-new Dzire is rated 5-star in safety. It is powered by one of the world's most thermal-efficient Z Series 1.2-liter engine, making it India's most fuel-efficient sedan.
I'm delighted to share that India's most desired sedan, Maruti Suzuki Dzire clocked 3 million production milestone in December '24. In December, again, Maruti Suzuki achieved a historic production milestone of 2 million units in a calendar year. So far, the company is the only passenger vehicle manufacturer in India to attain this landmark. Recently, Maruti Suzuki also celebrated 25 remarkable years of the WagonR in India. With over 3.2 million happy customers, WagonR is a favorite amongst first-time buyers and repeat customers alike. The consumer preference towards CNG vehicles continues to increase. In quarter 3 of this fiscal, every 1 in 3 cars sold by the company in the domestic market was a CNG vehicle.
Coming to the business performance in the third quarter. The company sold a total of 566,213 vehicles during the quarter. The sales volume in the domestic market was at 466,993 vehicles, a growth of 8.7% over the same period previous year. The company exported 99,220 vehicles, which is the highest ever in any quarter. The growth in export sales was about 38%. On the back of consumer sentiment during the festive season, coupled with increased sales promotion, the demand for cars improved in the third quarter. During the quarter, the company continued to create an excitement in the market by introducing the all-new Dzire, and significantly increased its efforts to reach out to customers. Because of these efforts, the company could maximize the opportunity in the market and achieved highest ever retail sales in the third quarter.
It is to be noted that till the first half of this fiscal, the growth in retail sales was just about 0.4% over the same period previous year. Owing to healthy retail sales in Q3, the cumulative growth in retail sales in the first 9 months of this fiscal has improved to 3.5% over the same period previous year. The company ended this quarter with a network stock of only about 9 days. On exports, the company continued to maintain a healthy growth in sales volume. In quarter 3, nearly 1 in every 2 cars exported from the country was from Maruti Suzuki. The company commanded nearly 49% share of India's total passenger vehicle exports in Q3 FY '25.
Coming to the financial results in quarter 3. During the quarter, the company registered highest ever net sales of about INR 368 billion against INR 318.6 billion in the same period the previous year. The net profit for the quarter was INR 35.25 billion, an increase of 12.6% over INR 31.3 billion in quarter 3 of the previous year. Since investors also look for a sequential comparison, I'll share. On a sequential basis, the operating profit margin EBIT has come down to 10% of net sales in Q3 compared to 10.3% in Q2. The -- the sales promotion expense was higher by 20 basis points over Q2, largely on account of seasonality owing to increased discounts in Q3. The higher advertisement expenses mainly on account of new model launch such as the all-new Dzire and campaigns around the eVitara have affected the operating margin by about 40 basis points over Q2.
ForEx movement was adverse in this quarter by about 20 basis points, mostly due to unfavorable yen. The depreciation expense increased by 20 basis points, largely on account of capitalization of some of the facilities in the upcoming greenfield plant at Kharkhoda. These adverse expenses were partially offset by favorable commodity prices of about 40 basis points and favorable operating leverage of 30 basis points. I would also like to flag for analysts that our subsidiary, SMG has earned an interest income on their cash of about INR 57 crores at the PAT level, which can be considered in addition to our stand-alone PAT, which is not included in our stand-alone PAT.
Coming to the highlights of the financial results in the 9 months, April to December, the company recorded its highest ever 9 monthly sales volume, net sales and net profit. The company sold a total of 1,629,631 units during the period, a growth of 5% over the same period previous year. Sales in the domestic market stood at 1,382,135 units and exports at 247,496 units. The company registered net sales of about INR 1,063 billion, in this period as compared to about INR 982 billion in the same period previous year. The company made a net profit of about INR 102.4 billion in this period as against INR 93.3 billion in the same period previous year.
We are now ready to take your questions, feedback and any other observations that you may have. Thank you.
[Operator Instructions] The first question is from the line of Gunjan from Bank of America.
My first question is on the demand environment. I mean, you did allude to sentiment improving in quarter 3 during festive year-end. Could you just talk about on the ground, what are you sensing? Is it fundamentally we've seen things improve? And how should we think about the growth outlook going into fiscal '26 for the industry?
See, in the first 9 months of the year, on a retail level, we have done about 3.5% growth. We expect this to continue through the fourth quarter also. The next year is slightly premature to talk about because the whole industry will meet somewhere at the end of February to come out with a consensus figure estimate for the growth. But it's known that the demand scenario is generally subdued and weak. It's a reality that we have to live with for some time.
And what were the actual retails in the quarter 3 for Maruti? I mean, is it -- if I just look at quarter 3?
About 573,000 approximately.
Okay. Got it. And my second question was on the margin. Thanks for providing those quarter-on-quarter changes that have happened. Just to be clear, when you say sales promotions increased by 20 basis points, was that the discounting increase quarter-on-quarter? Or how should I read this change in discounts?
Yes, Arnab, this side. So the discount for the quarter was INR 30,999, so around INR 31,000, which is almost similar to what was there last quarter. Last quarter was about INR 29,300, so not much difference in the discount.
Okay. Got it. And there is FX and some of these one-off costs that you called out, ad spend, Dzire launch, et cetera. Is there any element that we should consider as nonrecurring going into quarter 4? If I think about the -- I mean, just trying to think about the trajectory from quarter 3 to next 1 or 2 quarters, what elements can reverse or any tailwinds that we should keep in mind?
Yes. There is nothing significant. There are small positives and negatives. But overall, there is nothing significant to call out for.
Okay. Got it. And last question, just price hikes, if you can talk about what are the sort of price hikes we've taken -- we are looking to take from Feb onwards?
So we have recently announced a price hike. It's a small one. It's just about 30 basis points on our net sales. There are inflationary pressures and all kinds of cost increases to cover. Of course, we try to minimize the impact to the market. So as and when we feel the pressure that cannot be offset by cost reduction in-house, we will have to pass on to the market.
The next question is from the line of Jinesh Gandhi from AMBIT Capital.
Quickly on the demand side. So while we are expecting about 3.5%, 4% kind of a growth in fourth quarter, are we seeing divergent trends in rural versus urban? Many of the other segments are seeing weakness in the urban markets, but rural is doing well. Is the same the case for us?
Broadly, the past trend has been continuing, which is that the rural has been doing better than urban. And so in quarter 3, the rural growth was about 15%, urban was about 2.5%. This is retail because rural, you can ascertain only at the retail level and leading to an aggregate of about 8.3% growth in retail in the third quarter. So urban is also positive, but lower than rural.
Got it. Got it. And second question pertains to -- you talked about EV exports to be a large volume driver. So do we expect it to be our largest exported model from India given that it will be single manufacturing location for us, for Suzuki and Toyota? Should it be our best-selling export model now?
So it's difficult to predict volumes because there are about 100 countries of the world that we are planning to export. And EV itself, it's a very dynamic story, not just in India and all over the world. But we are prepared, and we will try to maximize our volumes.
Got it. Got it. And by when our Kharkhoda plant will start operations in fourth quarter FY '25 or it's a bit delayed?
Hopefully, within this fourth quarter FY '25.
Got it. And lastly, what was our export revenues for the quarter? That's my last question.
Yes. It's about INR 6,500 crores approximately.
The next question is from the line of Raghunandhan from Nuvama Research.
Congratulations, sir, on the eVitara launch. Firstly, for the EV, there are a lot of features packed into it. Can you talk about the efforts in terms of ensuring an optimized cost structure? And in future, how do you plan to continue the journey to bring down the cost down further?
See, this is a continuous and perennial effort of all our engineers and of course, at the global level also in this particular model. The one part that is good is we are reaping global economies of scale. And of course, all the efforts, both at Maruti level and at Suzuki level have gone into it. Let us see how we fare on this.
As a continuation, how would you see EBIT per vehicle? And by when do you see EBIT per vehicle matching that of ICE? Any kind of targets you would have in terms of scale or localization to achieve a similar kind of profitability?
I missed your question. What exactly per vehicle?
So the profitability per vehicle for an EV, when do you see it matching with that of an ICE? And for something that to happen, what kind of scale or localization you would need to achieve?
We have to be slightly realistic here. If the profit of an EV was equal to that of an ICE, why would the government support so much at the center level and the state level. The very fact that there is a drastic reduction in GST, there are so many subsidies at different levels, demand side, supply side means that there is a difference. So for a long time, it's not going to happen.
Our effort is to minimize cost so that we are able to satisfy all stakeholders, whether it is investors or society or customers. So we have to strike a balance and cost reduction is the way. But we have to be conscious that the customer gets confidence from range. So at least our first product has a high range and high range means high specs. So that raises the cost. So it's a multivariable equation that we have to continuously work on. And we'll play as we go along the way.
Fair point, sir. So the first step is to focus on acceptability and over a period of time, the cost savings will come into play.
Last question...
[indiscernible] is the first thing we would like to address.
Got it, sir. Last question. During December month, hatchbacks witnessed positive growth. Your thoughts on how you see this recovery and the factors driving the recovery going forward?
See, the quarter was still not positive on hatch. So it was -- the entry hatch had a degrowth. The mid-hatch was nearly flat. The premium hatch did have some growth. So there's a clear trend that the upper segments are doing good, but the lower segments are not. So this is still a phenomena that remains a challenge, and we'll have to keep addressing it in the future also.
The next question is from the line of Binay Singh from Morgan Stanley.
Congratulations, good set of earnings considering the environment we are in. Just on the electric vehicle, will you be eligible for the PLI incentive? And linked to that, the PLI incentive, as I understand, is on production, right? So it doesn't matter whether you sell in India or overseas, it will be on production that you're doing. So could you share your thoughts on that?
We are evaluating this at the moment. So when we come closer and we work our numbers, we'll be in a better position to report. I missed your second question.
That the production-linked incentive is on total volumes produced, right? So even if you're exporting it, once you qualify and you are, then you will get the PLI.
Yes, it is on exports also.
And secondly, on the CAFE norms, any update on that? Is the timeline still the same? Or any read across that you have from the government on the CAFE III?
Industry body SIAM is in discussion with the government on this. And as and when there are stakeholder consultations as an industry body, SIAM, will participate.
And lastly, just on electric vehicle, what are the next timelines to watch? Like when is the production starting, export dispatches, domestic price announcement? Like any sort of time lines, you could share?
All these in the next few months.
The next question is from the line of Pramod Amthe from InCred Equities.
Rahul, the first question with regard to the exports. They have been on a phenomenal rise. Can you give some color in terms of what has driven it? Or is it more the end market demand? Or what is the effort given to achieve this, one? Second, can you give us a country mix, how it has changed in 9 months versus last year?
Exports has been a very happy story for us, and it has been a consistent effort over many years, and it is now showing good results. The growth has been fairly distributed across regions. We've had excellent growth in Africa, in Latin America. Even in Middle East, the number is excellent, the overall share and in ASEAN, it's well spread out across regions. And I think we've got excellent traction in Latin America, maybe because of some more model launches. And we are getting some good customer response for our models in these markets.
I think it's a phenomenon of having the right enablers in place, the dealership network, the customer-friendly practices, the customer reachout efforts, enabling schemes like finance, customer complaint handling system, more model launches, and of course, the density of the network and more model launches. So it's working well.
It's very interesting that in Q3, we have exported a number which just about 4 years ago, we exported in 1 year. So in 1 quarter, we have done what we used to do in 1 year.
That I understand because from Jan to December, you literally doubled the export volumes on a monthly basis...
In Q3, it was almost very close to 1 lakh, 99,000 plus and we were doing 95,000 in the pre-COVID years.
Right. Congrats on that. Second one is with regard to EVs. First, in terms of buyer profile, how are you looking at in terms of buyer profile for EVs as and when you launch it in India? And is there anything you need to do at the sales outlets at NEXA to address the type of customers who will come for EVs?
So given the premium positioning of this, it's a ground-up -- it's not an ICE engine convert. It's a ground-up platform with many advanced safety features, 7 airbags, et cetera. 500-plus kilometer range and the fact that we are exporting it to 100 countries of the world, it gives a lot of confidence to the customers. So certainly, it's a premium product. And therefore, NEXA was the right positioning for this. What we have to do is at least in the service level, people have to be trained to handle high voltage. So we have done high-voltage courses for our service mechanics. We have an on-road roadside assistance. You just wherever you are stranded for whatever reason, it could be as small as a flat, I mean you've got a puncher, our on-road assistance, we will reach you. We have a service-on-wheels concept. So of course, charging, fast chargers at these points -- so all these and knowledgeable people to answer the customers' queries. These are the preparations that we have done.
Sure. And just to add on to that, considering that there is a more software involvement in these products and the initial feedback from many of the early launches have been that handling on the software issues from the customer point of view has been a big challenge. Are you taking any extra precaution to address this at your service levels?
What we have done is before launching this product, we did a very careful analysis of all the problems in existing models that the customers were facing, and there were quite a number of them. And we found that reliability is one big factor. So -- and the Suzuki name is synonymous with reliability over all these years. So we have taken a lot of pains to ensure that these problems do not occur, and there is very strong service support. And that -- I believe that will help in increasing EV adoption in the country also.
Sure. And the last question is with regard to the November announcement, which you made about the Toyota product, the EV product to be produced in the India plant. This is going to be -- so what has led to clinching this new product in your portfolio for production? And in terms -- is it because of the amount of back-end work local have done in the product? And is it going to be completely different than the existing platform? Or how to look at a long-term production capability of India into the EV space?
Sorry, you're talking about the eVitara?
No, November, you announced Toyota giving a further order, right, if I'm not wrong. There was a press release given out to BSE. Is it the eVitara or the one which was also displayed in the current auto expo?
So it was about this EV now, the eVitara.
But it looks to be on a longer wheel base than the existing one.
Okay. Let me clarify the eVitara is a fresh platform altogether. Therefore, the wheel base is also different. It is 2,700 mm. The eVitara and the current Grand Vitara are -- in terms of engineering, the product is different. The eVitara is on a fresh platform, designed a fresh. And therefore, the wheel base is higher than the Grand Vitara.
I'll discuss this later on with you on that.
The next question is from the line of Pramod Kumar from UBS Securities.
Sir, my first question is on the Dzire. So just wanted to understand, it's a model in the fourth generation, has been around forever. But the demand response, what we pick up talking to dealers and seeing the Internet forum is that there's been a big step-up in booking numbers after the launch. So if you can just help us understand what's been the kind of -- given the data you have, what's the kind of step-up in booking velocity what you've seen for the new Dzire versus the outgoing Dzire? And what is the kind of -- where are the additional customers coming in from? Is it like cannibalizing existing Maruti products? Or if there's a change in the profile of the buyer, what you're seeing incrementally?
And also, what does it mean internally as a feedback that what is kind of working for the consumer? Because if it's 5-star safety or features, definitely, you can do that with more models incrementally with the upgrades. And just trying to understand, is there the positive feedback and being used internally to kind of expedite products which are more aligned with the consumer choice? So I was just trying to understand what has led to that kind of sharp surge? And what can we do to capitalize on this for our other models, sir? That would be the first question.
Sure. So -- as you have rightly mentioned, the Dzire has been a very powerful product. Just one sedan from Maruti has done more volumes than all other sedans by the entire industry put together, more than 50% in the sedan share. And it is building on that. So the new Dzire, it's still very recent, but the new Dzire is doing more numbers than the earlier Dzire. And of course, we have around 20,000 pending bookings.
You asked about segment share. The interesting part is that the top variant, the ZXI and the ZXI Plus, they were at about 19% of the total book. Now we have 37% bookings in these top variants. So it's more than double now. So it appears that customers seem to have taken on the new looks and the new features very well. On top of that, we have the world's most thermal-efficient engine, delivering more than 25 kilometers per liter. So it has a very strong traction in the market.
Rahul, just trying to understand, as in, given the response, are we trying to kind of expedite those changes into new models because Swift is based on the same Dzire platform? So with a bit of a tweak, that can be a 5-star safety product as well. And if I'm not wrong, based on the social media post, it's like the 5-star safety is a big clincher for the consumer. So I'm just trying to understand how well can we use this -- the customer response to kind of tweak our product plans and any plans of probably a milestone in terms of more models being having 5-star safety? Anything which you can share on that count?
Okay. So we have always been very focused on safety. We provided many features and many models, which go well beyond compliance. This electronic stability program with electronic brakeforce distribution, heads-up display, 360-degree camera, hill hold assist and the seat anchorages, 7 airbags in case of our recent eVitara.
What we have also done is we have offered many of our other models to BNCAP for testing, and we are expecting the results in some time. We'll keep sharing as we go along. But product features, we are studying the market very closely in every segment, whatever the customer wants, our design engineers will be very happy to deliver the best in those segments using the best technologies.
Okay. And on the export side, given that the current average discount for you at a corporate level is 4% plus, not wrong to assume that for small cars, the discounting intensity is probably 6%, 7% or even higher. With that level of discounting in the domestic market, is it fair to assume that export is no longer for the same model dilutive? Because we've seen with export share rising, we have not seen any negative impact as such on profitability. While historically, export used to have a lower margin. But in the current context, is it fair to assume that exports necessarily rising is probably a good thing for margins and overall profitability than a drag? Is the understanding right, sir?
So the advantage of exporting to 100 countries of the world is that you can fairly aggregate your -- and you can fairly spread out your risk. So that is why we are moving in a healthy way.
On the profitability comparable as in the domestic for our same model?
We never comment on segment-wise or specific product-wise profitability, but we would not have gone ahead with such a large percentage of our portfolio if it was loss-making or low profit-making, et cetera.
And sir, given that you said that end of January -- end of December, the dealer inventory was down to 9 days, is it fair to assume that we are looking at a very robust 4Q as well in terms of dispatches and directionally reasonably better dispatches than March -- than the December quarter? And also, any expectations around budgets from your end? Or what is the ask from the industry body or from Maruti to the government with the budget kind of just around the corner?
So sorry, I missed your first question.
On the 4Q dispatch, 4Q outlook, sir, on dispatches, yes.
I mentioned that our retail sales is expected to follow the same trend as the first 9 months, which is around 3.5% growth even in Q4. So according to that -- and of course, we would like to enter the new year -- new financial year with less inventory, we would like to enter light. And on the union budget, I think most of the activities that take place, which are consequential to the auto industry are now in GST. But if there is any general improvement in the consumption momentum in the country, that would be good for all. What is good for India is good for Maruti, and I strongly believe that. And the reverse also, what is good for Maruti is good for India. So if the economy does well, if consumption grows, it will be good for us also.
The next question is from the line of Nitij Mangal from Jefferies.
Can you talk a little bit about demand trends in rural in terms of the mix of hatchback versus SUV? So how is that mix, let's say, in urban versus rural? And how is that changing over the years, especially on the rural side?
Increasingly, we are seeing that rural is -- the trends are coming closer to urban also. But of course, we have got good traction for lower models -- for smaller models like Alto. And rural is doing good in terms of growth, better than urban. So that is good. It serves as a derisking for India consumption, not just for cars, but for all commodities.
Is it possible to share any number in terms of what is the percentage of SUV in your rural sales today?
We'll just get the numbers, will come in sometime.
And I had one more question. So you have extremely low inventories and discounts still seem to be on the higher side. So as you now progress through the next few months and all, do you see a meaningful dip in discount levels?
It's very difficult to predict this. In fact, we've just taken a price increase. So a small price increase, and we may -- we'll have to balance all factors. So it's the result of many, many factors. So difficult to predict discounts.
The next question is from the line of Kapil Singh from Nomura.
Firstly, on the eVitara, I just wanted to ask if you've identified any top 4, 5 target countries in Europe or other regions of the world that you think has got significant potential. And Suzuki, you were setting up a battery plant in Hansalpur, I think. So any update on that? And what will be the advantages of Maruti when it starts sourcing cells from there?
So Europe pattern, we are largely aware which are the countries which are larger markets in EV than others. Of course, our efforts will be to maximize our volumes across all countries. Japan is another market that we will be -- it's Suzuki's home market that we will be targeting. And wherever the potential is, we would like to maximize our sales. Of course, we -- it depends on our distributor network also. We will be doing other markets also, for example, Indonesia. There are a total of about 100 countries. Our effort is to maximize volume across all these countries.
Battery, at least at SOP, it will be imported for some time. Later, we'll look at the status when is the localization possible.
And secondly, just on the cost outlook, if you could share more broadly for the next year, are there any cost inflations to keep in mind for next year? And also, how do you think about the fact that there is a capacity expansion happening across many of the leading OEMs next year? Do you sense that competitive intensity could be higher next year?
See, I'll take your second question first. Competitive intensity is a reality, and it is something to be welcomed, not to be scared of because it helps to bring out the best and it is best for the consumer. As a result, the whole country, the standard moves up. So it's a very happy situation. And maybe it helps expand the market also. So that's a positive. Of course, it remains uncertain. You are aware of our cost structure, commodity and ForEx rates. So we'll have to look at the -- look at these factors as we go along. And of course, operating leverage, these are the margin drivers.
Understood. And on CAFE, just one CAFE III basically, just wanted to understand from -- because Maruti is doing much better than the competition, right? So when we move to CAFE III in terms of EV penetration, what is the broad range that Maruti would need to have to meet the CAFE III norms, if you have any broad calculations in mind?
The CAFE III norms are yet to be announced. So when they are announced, we will have a product mix -- a technology mix, so to say. The good part is that Maruti Suzuki is present in all technologies, whether it is BEV or HEV or natural gas or biofuels, flex fuel, all technologies we are present. So we will have sufficient agility to meet these norms.
Ladies and gentlemen, we will take this as the last question. On behalf of Maruti Suzuki, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.