AutoBeta(AutoBeta.net)02/15 Report--

Suzuki, known as the "king of cars", recently released joint settlement data from April to December 2019. The company's cumulative net profit in the first nine months of the March fiscal year in 2020 was 116.5 billion yen (7.38 billion yuan), down 36% over the same period. The worst performance in nearly four years for the whole year.

According to Suzuki's latest results, cumulative sales in the first nine months were 2.6 trillion yen (164.8 billion yuan), down 8 percent from a year earlier, a decline in earnings over the same period in three years, and operating profit fell 34 percent to 170.4 billion yen (10.8 billion yuan).

Although Suzuki is the king of cars, its sales are not small in the global market. While Suzuki is still sold in China in 2018, its sales peak in recent years, with cumulative global sales of 3.2132 million vehicles, ranking 10th in the global car sales list, second only to PSA Group, and even ranked as the top 10 most valuable car companies in BrandZ in 2018, better than Volkswagen.

Since entering 2019, Suzuki has chosen to withdraw from the Chinese market. In Suzuki's view, its market share in the Chinese market is gradually losing, so that it has to switch to the more demanding Indian market. According to 2018 data, India sold 1.73 million vehicles in the whole year, accounting for 51.2% of the Indian car market, equivalent to Suzuki sales in the Indian market has exceeded half of the overall car market sales, is definitely the local "magic car", the second Hyundai only 550000.

Although Changan Suzuki, which set up a joint venture in China as early as 1993, once became popular in the Chinese market, sales of Suzuki in China continued to decline as domestic demand for "big and beautiful" grew. Annual sales in 2017 are only 83900 vehicles, and sales after 2018 are not optimistic. By February 2018, cumulative sales were only 7185 vehicles. Therefore, Suzuki transferred its 50 per cent stake to Changan Automobile with a symbolic offer of 1 yuan in September 2018. After that, it will be wholly owned by Changan Automobile, and the company will become a wholly-owned subsidiary from a joint venture.

Suzuki, which withdrew from the Chinese market and strengthened the Indian market, has not performed well this year, with demand for new cars plummeting in India, the core market, resulting in an 18 per cent year-on-year decline in Suzuki new car sales to just 1.08 million vehicles. In Japan, the local market, affected by typhoons and consumption taxes, sales fell 6% year-on-year to nearly 480000 vehicles, so that cumulative global sales fell 13% in the first nine months from a year earlier to 2.16 million vehicles.

To this end, a Suzuki spokesman said that although the company has reduced costs through a number of channels in the past year, it still can not stop the decline in sales, the once outstanding Indian market, and because it has experienced rapid growth to saturation in the past decade; coupled with the negative impact of the exchange rate factor on profits, as well as the impact of China's novel coronavirus will put some pressure on the market performance in the coming months.

Although Suzuki, which highlighted the Chinese sales market as early as 2018, is no longer sold in China, it still needs to supply the Indian market by purchasing some parts and components in China. However, due to the impact of the epidemic in the Chinese market, many parts factories have stopped production, which will have an impact on production plans in India. What's more, it is the peak season for new car sales in India, so Suzuki has begun to discuss looking for contract manufacturing options outside China.

Considering a variety of factors, Suzuki has cut its profit forecast for the latest fiscal year by 40%. Obviously, Suzuki, which lost the Chinese market and moved to India, is also facing a sharp decline in sales due to the rapid decline in the growth of the local market and a number of factors.

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