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Seltos Helps Kia Achieve Operating Profit In 1st Year – Revenue Equals Tata Motors PV

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Kia India revenue is almost equal to Tata Motors PV – But Kia has posted +2.9% margin where Tata has -9.8% margin

Fiscal 2020 may have started off on a bad note for the Indian automobile sector with the onset of the coronavirus pandemic causing lockdown and subsequent slowdown over the initial months. However, the recent festive season brought in much needed cheer. Automakers have been announcing increased sales over the past two to three months and market shares have been steadily on the rise.

Kia Motors, a relatively new comer to the Indian automotive scenario, is now rubbing shoulders with the leading automakers in India. If October 2020 sales are anything to go by, it may be seen that Kia Motors was the fourth largest automaker in India, ahead of stalwarts such as Mahindra and Toyota with 21,021 units sold and an overall market share of 6.30 percent.

Kia Motors has three products in its portfolio – Seltos, Carnival and Sonet, all of which are utility vehicles. Taking segment wise market share, Kia now holds a 13-15 percent share. In its first year of operation, Kia has produced over 1 lakh units and posted revenue of Rs.10,838 crores. Almost all sales were of the Seltos SUV with hardly a few hundreds of the Carnival MPV.

Kia Motors Operating Profit

Kia Motor India has been one of the quickest to turn operationally profitable in the passenger vehicle market in the country despite the period being one of the worst that the auto sector has ever experienced. For the year ended 31st March 2020, Kia Motors posted operating profit at Rs.308 crores while interest and depreciation costs resulted in net loss of Rs.326 crores for the year.

When taking the combined turnover of Kia and Hyundai Motors, this was 63 percent of market leader Maruti Suzuki in FY20 with combined market share of 23-24 percent. Kia’s investments are at a total of Rs.8,771 crores while average realization per vehicle in FY20 was at Rs.10.2 lakhs, which was 1.5-2.1 times that of Maruti Suzuki and Hyundai.

The company’s revenue was also practically equivalent to that of Tata Motors passenger vehicle segment. But there is a stark difference in operating profit margins. While Kia posted a margin of +2.9 percent in FY20 as against Tata Motors which posted negative margin of 9.8 percent. Segment leaders Maruti reported operating profit margin of 9.7 percent while that of Hyundai stood at 10.06 percent.

Even Higher Sales / Profit In FY 2021

For fiscal 2021, Kia aims even higher. In the current fiscal, thanks to their newly launched mini UV, Sonet – the company aims to sell a total of 2 lakh cars. If they manage to achieve this, they will record a turnover of over Rs 17,000 crore – states ETIG analysis. Such huge profit margins and turnovers being recorded by a company which is just 1 year old – has never been seen in the Indian auto industry before. And that too in the middle of a global pandemic.

Kia India’s current market share stands at about 5 percent. At the current rate, Kia is likely to overtake Tata Motors and become the 3rd largest car brand in the country.

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