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Thanks to Maruti in India – Suzuki beats BMW to become world’ most profitable car company

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Suzuki has overtaken BMW in terms of profitability. In the third quarter, while BMW profitability margins stood at 11.4%, Suzuki gained a profit margin of 11.8% thus overtaking the German automaker by 0.4%. BMW has also faced defeat to Mercedes in 2016 when it lost its title as the world’s largest seller of luxury cars.

India is the biggest market for Suzuki. Here, Maruti Suzuki owns more than 51% market share. Every 2nd car sold in India is a Maruti Suzuki. Maruti sells more cars in India, than Suzuki sells in the entire world.

In a survey conducted by Ernst and Young, BMW lost its highest profitability status due to two factors. The company had to face both diesel scandal and losses from trade tariffs between Germany and USA which led to lower sales of German made cars. Despite a lower profitability margin, BMW continues to be the most profitable automaker for the year since Suzuki only overtook them in the last quarter.

Even as the diesel scandal has had an impact on BMW, the company is not facing recalls of thousands of vehicles as was the case with both Volkswagen and Daimler.

Suzuki sales and profits have seen a surge due to increased demand both in China and India. India, being one of the company’s primary markets has seen profits increase by 68% YoY as of February 2018.

The company’s annual operating profit also increased to US$3.3 billion in May 2018 while both automakers have seen in drop in annual sales at 4.8% for Suzuki and 2.8% for BMW. The other profitable companies which are below Suzuki and BMW are Daimler and Volkswagen which are both at 6.5%.

Furthermore, Suzuki has laid out plans to grow sales in India. By 2020, the Maruti plans to produce 2 million cars annually, and by 2030, this number is to increase by 5 million. The company has 3 plants, 2 under Maruti Suzuki in Haryana, and 1 under Suzuki in Gujarat. The company will invest USD 1 billion at Toyota’s plant in Karnataka, as per their recent agreement. These plans will help the company grow their sales even further in India.

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