[SmartCat]

Originally Posted by autobahnjpr

I guess this data does not give the full picture. The profit margin probably represents what is left with Indian subsidiary or what is allowed to be left to Indian Subsidiary. I think a large part of profit is repatriated to Japan in lieu of technology, engine etc. So I think Toyota India makes money - GOOD money - but a large part of it might be sent to parent organization and only 3.6% left to Indian subsidiary.

Partly correct.

1) Note that Maruti paid close to Rs. 3,000 crores as royalty payments to Suzuki Japan. Despite that, its net profit margin is 8%.

2) By law, a parent company can 'siphon off' a maximum of 5% (or 7%, not sure) of total sales as royalty payments. Not more than that.

3) Royalty payments is a technique used by MNCs to reduce their tax liability. Royalty payments go into 'expenses' column.

4) If the parent wants to invest money for expansion, they will route it back to India. These days, approvals for investments happen quickly - so there is no real penalty for taking out royalty payments.

5) This is one of the reasons why MNCs don't like to list in stock exchanges. Minority shareholders will make a hue and cry (eg: Maruti shareholders) if royalty payments are taken out. Because then the Indian subsidiary will show lower profits and gives out lower dividends.

[swiftnfurious]

Originally Posted by smartcat

... Fiat India is merrily making profits on engine sales...

Good find smartcat! I am not sure the profits for Fiat is coming from engines alone. And I doubt they'll have to shut shop soon. Reason - AMT (Magneti Marelli)! With the ever growing Automatic share, I think they'll make good profits going further too.

I doubt Maruti will bother about their own diesel engines now since there is a sharp shift in buying preference in terms of the engine option; they may do well with continuing Fiat's engine rather than spend time & resources for lackluster engines like the one on Celerio.

[OrangeCar]

Originally Posted by GTO

• After selling an unbelievable number of Rs. 20 lakh Innovas & Rs. 35 lakh Fortuners, I'm disappointed with Toyota's margin of merely 3.6% .

Would be interesting to see the amount of royalties paid to their parent Japanese firm. Although all, or at least most Indian subsidiaries pay royalties, question remains which firm pays highest royalty per car.

[Rajeevraj]

Nice thread smartcat. Thanks for sharing. Quite an eye opener. Especially for VW and Fiat. Fiat of course makes money from the engines. I assume a lot of the VW margin comes from Audi. Apart from that I assume they will have nice fat margins on the Polo/Vento/Rapid. Considering these are 7 year old models, I think they have the Bill of Materials and manufacturing process perfectly optimized. The new features they are don't cost them much from an engineering perspective since most stuff is plug and play and available in the global models. And of course the prices keep increasing.

Ford probably would be disappointed. With new models like the Figo/Aspire and the Endeavor launched in the recent past, still seem to be struggling to generate the revenues proportionate to the effort being put in to crack the India market (compared to VW and Fiat).

Like GTO mentioned, Toyota is surprising. One would have thought they make huge margins from the Innova and Fortuner.

[neofromcapone]

Superb find smartcat and thanks for sharing.

http://www.team-bhp.com/forum/indian...ml#post4177928


@GTO & Immix
can we add the total units sold per manufacturer into this mix?

[PrideRed]

Originally Posted by GTO

Superb thread as always, Smartcat! Thanks for sharing.

Based on the data you provided, I prepared a sheet calculating the profit %:
Attachment 1627027

• Guess who has the fattest profit margin? Fiat: an engine supplier that incidentally also makes cars. The 1.3L MJD is now 10 years old, so that surely helps keeping the margins fat.
• If GM can't figure out how to make money in India after 20 years of trying, they never will. R.I.P. (as per recent rumours). Bring Ford's numbers into the same picture and it's clear that the Americans need to learn a thing or two about fiscal discipline. Let's not forget that internationally too, Ford + GM + Chrysler have either filed for bankruptcy in 2008 (or seen it upclose).
• VW is laughing all the way to the bank, old models, shoddy reliability & after-sales and small volumes notwithstanding.

Interesting to note that globally, the stories are very different. Clear indication to manufacturers which goes on to show how different Indian car market is!

GM made $9.4 Billion dollar(2016)
Ford made $4.5 Billion dollar(2016)
VW made $5.5 Billion dollar(2016)
Fiat made $400 million dollar(2015).

Note: The above numbers are not accurate but approximate figures.

[Jeroen]

Originally Posted by autobahnjpr

I guess this data does not give the full picture. The profit margin probably represents what is left with Indian subsidiary

Originally Posted by smartcat

2) By law, a parent company can 'siphon off' a maximum of 5% (or 7%, not sure) of total sales as royalty payments. Not more than that.

Depends a bit on the operating model, but of course, there are perfectly legal other means than royalties to keep profits in the manufacturer home country. (i.e. outside India). The most obvious one being how much they charge internally on parts and or services provided by the mother company directly or indirectly. (We had a discussion with the Indian tax authorities every year around transfer pricing)

Or are the cars these company make, 100% Indian make with no parts, or assemblies coming into India?

Jeroen

[Immix]

Originally Posted by neofromcapone

@GTO & Immix
can we add the total units sold per manufacturer into this mix?

Here you go.



Note:
1. Sales figures for all manufacturers except for Tata, M&M, and luxury brands are taken from the monthly sales reports regularly posted in this forum
2. Figures for Tata taken from this webpage
3. Figures for Mahindra & Mahindra taken from this report
4. BMW and Mercedes sales figures are taken from this news article
5. Volvo's sales figure is an estimate and is taken from this news article

[vibbs]

Fantastic thread!!

My My VW actually making that much money despite selling so less! Toyota so low despite selling so many Innovas and Fortuners (Higher segment = more Margin).

Fiat, making more money than Honda! No wonder they are least bothered about selling their cars. Why bother, when your engines can make you earn so much. People are worried about what happens once the manufacturers move away from the 1.3 MJD. Well they will then throw in the 1.6 and 1.9 Litre engines. Pretty good on their own, and I can already think of a couple of companies who would be interesting in getting these engines in their cars.

Maruti and Hyundai though are a class over the others riding on the sheer numbers they generate.

[Jas21]

Nice thread!

However, as few of us mentioned earlier, this does not show complete picture & their margins have to be much higher.

Honestly, if I were to get Max 8% of return, I would rather invest in an FD, instead of running a business

[streetfighter]

Great thread, great analysis. I have a question, don't know if it is stupid... What is the typical margin on a car that is sold? For e.g. if the ex-showroom price of a car is Rs 10 lakhs, what is the cost price of the car, what is the dealer margin, what is the profit amount the manufacturer gets typically?

[SmartCat]

Originally Posted by streetfighter

Great thread, great analysis. I have a question, don't know if it is stupid... What is the typical margin on a car that is sold? For e.g. if the ex-showroom price of a car is Rs 10 lakhs, what is the cost price of the car, what is the dealer margin, what is the profit amount the manufacturer gets typically?

Here is Maruti's expenses as a percentage of sales (ex-factory price)

Raw materials - 65%
Other expenses - 15% (includes royalty, admin costs, utilities, transport etc)
Employee costs - 3%
Depreciation - 5%
Corporate Tax - 4%

If a car has Rs. 5 Lakhs ex-factory price, it's raw material costs (includes amount paid to suppliers & component makers) are Rs. 3.5 Lakhs.

Maruti, on an average, pays 13% excise duty on the sales. I guess the ex-showroom price is arrived at by adding (sales + 13% excise duty + transport cost)

[jkdas]

Originally Posted by GTO

Superb thread as always, Smartcat! Thanks for sharing.

• Guess who has the fattest profit margin? Fiat:

• After selling an unbelievable number of Rs. 20 lakh Innovas & Rs. 35 lakh Fortuners, I'm disappointed with Toyota's margin of merely 3.6% .

• If GM can't figure out how to make money in India after 20 years of trying, they never will. R.I.P. (as per recent rumours). Bring Ford's numbers into the same picture and it's clear that the Americans need to learn a thing or two about fiscal discipline.

• VW is laughing all the way to the bank, old models, shoddy reliability & after-sales and small volumes notwithstanding. It's making more money than Honda & Toyota, with a fraction of the volumes.

Good thread/find/analysis. I ( and think most too) am surprised to see Fiat here; equally surprised about Toyota and VW.

No one cars about a green world too, VW proved.

Edit: Was discussing this with a friend/Tbhpian. Said we should edit the thread title to "Fun Facts" .

[Kairalee]

Originally Posted by smartcat

Note:
5) Volvo India sales seems to be unusually high. It probably includes sales of Volvo buses and trucks (not sure).

Originally Posted by Immix

These are actually the figures for Volvo's trucks and buses (Volvo India Private Limited). The figures for their cars (Volvo Auto India Pvt. Ltd) again from Tofler are as follows:

Revenue: 468 Cr
PAT: 24 Cr
Net Worth: 36.4 Cr

Does Volvo add the profits of car sales to their revenue figures or does that get attributed to the revenues of Geely Automobile of China?

I may be wrong, but Volvo India sales is probably only from truck and bus sales.

[volkman10]

Financial performance of top auto companies [ listed on Indian share market (BSE/NSE).]

-In revenue -Maruti has not only dethroned Tata Motors (non JLR) but now is far ahead with its product onslaught.

- Mahindra too is closing on Tata. Once Mahindra (2006) was smaller than half the size of Tata.

- Net Profit Margin -Mahindra turn out to be more profitable than the largest Indian company (RIL) and favorite of Indian stock market since 90s.

-Market Capitalization -Maruti Suzuki India Ltd (MSIL) is by far most valuable Automaker in India.






Tata Motors (non-JLR) :

Tata Motor’s domestic business is perhaps the worst performer in terms of profitability. In over a decade, it’s the only company which has reported huge losses, twice.
High capital expenditure in developing new products in PV segment and upcoming BS VI up gradation in CV segment may keep cost high and profit elusive in near term. Profit from JLR is helping Tata motors to keep its head above water

LINK