Suzuki Motor Corporation saw its operating profit almost wiped out during the first quarter primarily because of plunging car demand in India, its largest market which has world’s highest coronavirus infection rate.
Japan’s 4th largest automaker posted an operating profit of 1.3 billion yen ($12 million), its worst quarterly performance on record. Suzuki said it booked an extra ordinary loss of 15.4 billion yen during the quarter due to plants shutdowns amid COVID-19 pandemic.
Suzuki declined to offer forecasts for full-year profit and dividends, citing ongoing uncertainties about the impact of the coronavirus in the coming months. According to Suzuki Managing Officer Masahiko Nagao:
“In India infections continue to rise significantly by the day. It is difficult to read how virus situation will play out in India. We must monitor this carefully.”
Global automakers are taking a big hit from the COVID-19 outbreak, which shuttered vehicle factories this year and has kept customers out of car dealerships, leading to a drastic drop in sales and production. Suzuki suffered a 64% decline in global vehicle sales in April-June, led by an 82% drop in India, which is struggling to control the coronavirus as it reopens its economy.
India accounts for more than half of Suzuki’s global car sales. According to an industry trade body, sales volume in India is expected to take another 3 to 4 years to return back to peak levels. Other than India, other profitable markets for Suzuki including its home Japan, Indonesia as well as Europe took a hit thus erasing profits for company’s automobile operations.