MUMBAI -- Maruti Suzuki India reported a 48% jump in net profit for the quarter ended December on Wednesday, buoyed by sales of expensive models that offset the otherwise subdued growth in vehicle demand amid the country's demonetization drive.
India's largest carmaker marked a quarterly net profit of 17.45 billion rupees ($256 million) against 11.83 billion rupees a year ago, helped by additional factors such as lower sales promotions and marketing expense and cost-reduction efforts. Higher non-operating income also contributed to an increase in profits, it said in a release.
"This was partially offset by the increase in commodities prices and adverse foreign exchange movements during the quarter," the company said.
Net sales rose 12% to 166.24 billion rupees, despite a tepid 3.5% rise in volumes to 387,251 vehicles during the October-December quarter.
The company had shocked markets with its first sales decline in five months in December. It reported a 4.4% decline in domestic sales to 106,388 vehicles from 111,333 a year ago, largely owing to Prime Minister Narendra Modi's move to remove from circulation 500-rupee and 1,000-rupee notes on Nov. 8.
The demonetization affected consumer demand. A cash crunch in the economy resulted in overall car sales falling for the first time in 11 months, by 1.36% to 227,824 units last month from a year ago. Some companies shut down factories for maintenance also to align with the dip in demand.
Maruti's strategy to shift production to costlier vehicles, however, seemed to have helped the company and somewhat offset the demonetization effect. Primarily a budget car manufacturer, Maruti tends to sell pricier models such as the S Cross and Baleno through its new Nexa dealership.
Earlier this month, Maruti launched the premium hatchback Ignis at a starting price of 459,000 rupees. The unit of Japan's Suzuki Motor is committed to introducing 20 new models as part of its five-year "Suzuki Next 100" plan launched in 2015.