Maruti Suzuki has a reason to smile.

The car maker announced that there is an over three-fold increase in its quarterly net profit. The net profit is at Rs.687.53 Crore in the third quarter of the current fiscal ending December 31, 2009, against the same quarter of previous fiscal year, while its net sales went up by over 62 per cent to Rs.7,334 Crore.

This profit can be said to have been fuelled by easy and affordable car loans and a reviving domestic economy.

Maruti Suzuki’s chief financial officer Ajay Seth remarked, “This has been a good quarter,” as he announced the company would expand capacity to defend its market leadership position from global rivals and meet increasing domestic demand.

Many car makers such as General Motors, Renault, Toyota and many more have disclosed their plans for new car launches in India to have a bigger piece of the fast-growing market share to counter sluggish demand in the developed countries because of the global recession.

India has now emerged as the third largest car market in Asia, China being the first followed by Japan. Moreover, India is one of the few countries where automobile sales are rapidly increasing. In India, car sales jumped 19 per cent last year to 1.43 million units.

Maruti Suzuki sells about one in two cars in the country and its sales jumped 62.5 percent to 73.34 billion rupees.

Ajay Seth also said Maruti Suzuki planned to invest 17 billion rupees to make 250,000 more cars each year from April 2012, thereby increasing the total capacity from one million units to two and a half times. This expansion would take place at the car company’s facility at Manesar. He added that the car maker could further ramp up capacity “if there is a need later.”

The car manufacturer attributed the profit increase partly to government stimulus measures aimed at helping the industry ride out the global economic slump. These measures have put more money into the hands of India’s growing middle class.

The company said that favourable conditions in the domestic market supported by the government’s stimulus package and ease of automobile finance helped achieve good sales. Nearly four-fifths of cars in India are bought using car loans.

Maruti Suzuki’s domestic sales in the quarter jumped by 38 per cent to 218,910 units while exports soared by 167 per cent to 39,116 vehicles, spurred by European government incentives to scrap gas guzzlers.
The company is now “cautiously optimistic” about sales volumes in the fourth quarter but added rising commodity prices would put pressure on profit margins.