During FY14, Maruti Suzuki, which currently commands a market share of 42% saw a 16% increase in profits with net profits standing at INR 2,783 crores. Second placed was Hyundai India, with profit of INR 1,108 crores, followed by Volkswagen and Nissan at INR 420 crores and INR 410 crores. Fourth placed on the list is Fiat India, with profits of INR 216 crores.Exporting cars holds the key to increasing profits for companies who do not have a larger market share in India.
Speaking about loss making companies, GM India leads the list with INR 3,812 crores in losses during FY14. Second place is taken by Ford with INR 597 crores in loss, third placed is Honda with INR 479 crores in loss, and fourth placed is Toyota, with INR 62.9 crore in loss.
If you are wondering, how did Nissan India and Volkswagen India, who sell a fraction of cars as compared to Honda Cars India and Ford India, manage to post staggering profits, answer to success of both Volkswagen and Nissan lies in the fact that these auto majors have managed to decode the profitability puzzle. It may be mentioned that during 2013-14 period, Ford sales stood at 84,469 units while Volkswagen sales amounted to 52,528 units. Both auto companies held market share of less than 3%. However, Volkswagen posted net profits of INR 420 crores while Ford announced losses to the extent of INR 597 crores.
The fact that multinational automakers post profits is that they ensure that a major portion of production is exported while they also ensure that maximum parts are locally produced. It is on these two counts that both Volkswagen and Nissan, though new entrants into the Indian auto sector, have far surpassed other automakers, both where profitability and increased sales are concerned.
Volkswagen and Nissan apart, automakers such as General Motors also have to deal with corporate fraud and a host of recalls which is compounding losses. General Motors losses went up from INR 1,142 crores to INR 3,812 crores in FY14. Ford India too had to deal with various market challenges, car recalls and thus posted increased losses, though the company has extensive plans in place.
Ford India plans to launch new cars next year, while the company plant at Sanand (set to be commissioned next year), will see installed capacities increase two fold to 6.1 lakh unit engines and 4.40 lakh units vehicles to cater to both domestic markets and exports.
via ET Auto