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Old 24th March 2019, 11:44   #1
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Default How much revenue each Indian car generated in 2018

Revenue Generators:

How much revenue each Indian car generated in 2018-16.jpg

Estimated revenue generated by each product (Crore ₹)

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- Maruti Suzuki Dzire the largest selling car also generates revenue equivalent to whole of Toyota in India.

-But that said, Toyota is making enough money with Innova and Fortuner compensating for the lackluster mass market segment.

- S/CUV's again trumps sedan's and this trend seem to continue going forward.


2018 Average Price Tag (Estimate) – Signifies the positioning of OEM in Indian market


How much revenue each Indian car generated in 2018-36.jpg


-Average price tag of cars sold in India is around ₹ 7.7 Lakh

-Tata with its revamped product pipeline is likely to see improvement in coming years

-Nissan-Renault-Datsun has slipped in lower price band and the future doesn't seem bright.

- Honda once had premium brand image in India has now slipped because of high volume-low price driven growth strategy and over usage of the common platform.

-With high value products, Toyota certainly has an edge over others, interesting to see how the Suzuki alliance is gong to help here.

-Skoda and Jeep’s high value products certainly give them good foothold in Indian market, even with lower volumes.


Indian Customers move to the premium segment,

How much revenue each Indian car generated in 2018-41.jpg

-Indian buyers are certainly moving up in premium price ladder, gradually

-Investment in future products to serve bottom of pyramid may prove to be futile , especially considering tightening emission and safety norms in the country


Dealer Value Throughput from New Car Sales (Crore ₹ – Based on average ex-showroom price)

How much revenue each Indian car generated in 2018-52.jpg

- These figures just show estimated arithmetic average at OEM level

- Actual dealership revenue will be in range of 2%-7% of these figures, based on margin offered by the OEM on different product(s), and type of retail format

- Based on volume throughput, revenue and profitability of dealership may show large variation from these figures

- Dealership location (Urban/Semi-Urban/Rural) is key determinant of actual volume throughput

-Toyota dealers certainly make most money due to high value products sold in large volume

-Despite low volume, high value of products still make financial sense for Jeep and Skoda’s dealer

- Nissan-Renault alliance’s dealership certainly looks in big financial trouble
Moreover, their existing car park (cars sold earlier) is not big enough for sustenance through after sales service business
And it is a vicious circle : Low realization at dealership > Poor service quality > Unhappy customers > Bad word of mouth > Reluctant new buyers > Low sales > Repeat


Source:

Last edited by volkman10 : 24th March 2019 at 11:51.
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Old 24th March 2019, 15:59   #2
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Default re: How much revenue each Indian car generated in 2018

Thanks a ton volkman.
This is truly insightful. These are the exact kind of numbers that I was interested to know about the ensemble average of the indian market.
This picks out the cash cows and the sales dud exactly and its normalised with volume, which generally skews our vision.
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Old 26th March 2019, 15:13   #3
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Default Re: How much revenue each Indian car generated in 2018

Thanks for the insightful thread at volkman10!

Some observations from my end:

• Revenue vs Volume ranking shows that those upto +/- 3 look to be VFM in their respective segment.

• Toyota is laughing away to the bank. Toyota and Fortuner. Even the dealers are happy.

• In the volume + avg ex-showroom graph, Hyundai is sitting are a very comfortable position - reflects in the product lineup as well. Neither too expensive nor too low-end.

• While the 2018 numbers reflect the highest slate in the 5-7.5L range, I expect the 7.5-10L range to be the top volume segment in 2019 and more so in 2020 thanks to new BS 6 norms.

• In terms of dealers, Jeep dealers (mostly Fiat dealer) look to be in a pretty decent spot for a one trick pony. With the Compass AT launch and maybe the Renegade in 2020 or later, their positions will be strong. Time to pick up a Fiat / Jeep dealership?

• My friends in the industry - mostly in Maruti and other mass market brands tell that there has been as severe slump in MSIL sales figures. Since the last 3-5 months, the sales are at the lowest in recent years. Is is the upcoming norms of the cars or something else? I've also come across reports of average ownership period of cars going down over the years. Currently its reported to be under 4 years. However, that doesn't translate to increase in sales!

• Diesel is soon going to be very expensive for small cars. We have been seeing this in the Celerio (disaster of an engine) and Ignis (low D sales). P/D sales also have been favouring Petrol cars in sub-10L car segment.

• Manufacturers without segment diversification could be hit hard - Mahindra with diesel SUVs, Maruti with entry level cars, Jeep with just one model and Honda with market duds - CR-V, Accord and Civic. Somehow Toyota despite the Yaris episode is riding strong on the Innova and Fortuner sales.

Last edited by blackwasp : 26th March 2019 at 15:17.
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Old 26th March 2019, 16:04   #4
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Very interesting, thanks for sharing.

Any insights as to profits/margins on each car. This is all revenue, which is an important part, but everybody needs margin to survive long term

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Old 26th March 2019, 17:13   #5
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Default Re: How much revenue each Indian car generated in 2018

Quote:
Originally Posted by Jeroen View Post
Any insights as to profits/margins on each car. This is all revenue, which is an important part, but everybody needs margin to survive long term
Across all the models, Maruti had a profit margin of 32%. One can find this out by reading the annual report. That is, cost of raw materials/components etc was Rs. 58,000 crores while revenues were Rs. 80,000 crores.

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Old 26th March 2019, 17:18   #6
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Across all the models, Maruti had a profit margin of 32%. One can find this out by reading the annual report. That is, cost of raw materials/components etc was Rs. 58,000 crores while revenues were Rs. 80,000 crores.
Thanks<

I am not that familiar with automative industry, but that seems a lot! Here I was thinking car companies struggle. Well, it looks some donít.

Do they include cost for development, amortisation of assets, cost of capital etc in all of that, or is this more an unadjusted margin? With a similar definition of profit how would say a VW, BMW, Jaguar stack up to 32%?

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Old 26th March 2019, 17:39   #7
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Default Re: How much revenue each Indian car generated in 2018

Quote:
Originally Posted by Jeroen View Post
I am not that familiar with automative industry, but that seems a lot! With a similar definition of profit how would say a VW, BMW, Jaguar stack up to 32%?
Tata Motors (Tata cars + Tata CVs + JLR) profit margin across its range is around 38%. That is, raw materials and components constitute 62% of revenues.

Quote:
Here I was thinking car companies struggle. Well, it looks some don’t. Do they include cost for development, amortisation of assets, cost of capital etc in all of that, or is this more an unadjusted margin?
Oh yeah, many car companies struggle. These are just raw material costs. When you add the following, many car companies show red on their balance sheets.

- Cost of development (R&D) goes into employee expenses and also depreciation expenses (that is, they are classified as assets)
- Cost of setting up a factory (goes into depreciation expenses again)
- Interest costs (JLR has a pile of loan on its books)
- Employee expenses
- Marketing expenses

The list goes on.
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Old 26th March 2019, 18:10   #8
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Default Re: How much revenue each Indian car generated in 2018

Quote:
Originally Posted by SmartCat View Post
Oh yeah, many car companies struggle. These are just raw material costs. When you add the following, many car companies show red on their balance sheets.

- Cost of development (R&D) goes into employee expenses and also depreciation expenses (that is, they are classified as assets)
- Cost of setting up a factory (goes into depreciation expenses again)
- Interest costs (JLR has a pile of loan on its books)
- Employee expenses
- Marketing expenses

The list goes on.
Employee expense is hardly a cost in manufacturing. About 6-7% at max.
The remaining are significant expense for sure esp the first 2, unless govt has offered subsidized land and the company imported dies from other ongoing factory.
One of the reason for high profit for Suzuki may be due to part sharing. The switch gear, engines, platform etc are used across multiple cars so this will lead to saving.
This was also observed when Fabia and Polo started to be made on the same platform in 2009-10 I guess that got the cost down.
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Old 26th March 2019, 21:10   #9
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Default Re: How much revenue each Indian car generated in 2018

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Originally Posted by aniyo View Post
Employee expense is hardly a cost in manufacturing. About 6-7% at max.
Seems reasonable.
But then again GM (in US) faced bankruptcy because of employee costs (OK, costs associated with retired workers, but employee costs nonetheless.)

Regards
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Old 27th March 2019, 04:28   #10
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Quote:
Originally Posted by aniyo View Post
Employee expense is hardly a cost in manufacturing. About 6-7% at max.

.

Yes, but in many countries it is almost a fixed cost. You can not lay off people overnight. In the USA the car manufacturers have huge debt/obligations towards pension funds.

If you have a lull in the market, you can absorb that by purchasing less raw materials, but employee cost are rarely very flexible. At least not short term.

So a lot of capital, cost or cash, whichever way you would like to se it, is essentially tied up for at least mid term.

It might not be the biggest cost, but it is still the one that tends to be pretty complex in managing, especially in volatile markets
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Old 27th March 2019, 05:03   #11
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Default Re: How much revenue each Indian car generated in 2018

Quote:
Originally Posted by blackwasp View Post
My friends in the industry - mostly in Maruti and other mass market brands tell that there has been as severe slump in MSIL sales figures. Since the last 3-5 months, the sales are at the lowest in recent years.
It seems to be true, you can read about that here. Link (Maruti cuts production by 25% in March)
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Old 29th March 2019, 18:52   #12
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Default Re: How much revenue each Indian car generated in 2018

Quote:
Originally Posted by volkman10 View Post
-Indian buyers are certainly moving up in premium price ladder, gradually
Is this just a static point observation or is there a trend to it, couldn't locate it on the source website?
Reason being - difficult to ascertain movement without a pattern of sorts over a time period.

Quote:
-Toyota dealers certainly make most money due to high value products sold in large volume
No wonder, there was a beeline for opening new dealerships in Pune when DSK Toyota had to shut shop.

Quote:
Despite low volume, high value of products still make financial sense for Jeep and Skodaís dealer
But this may not be a good financial investment for the dealer, especially for Jeep dealers, since the rarefied product line up may not help them sustain.
If Compass sales go down due to some reasons, then the dealer doesn't have a backup product to make money from.

One more observation - from the dealer throughput graph, for manufacturers like Mahindra and Maruti - inspite of not having a high average ex-showroom price, their dealer value throughput is second only to Toyota.

If I am in the market to open a dealership, I know where to put my money, atleast for the near foreseeable future.
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Old 30th March 2019, 11:29   #13
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Default Re: How much revenue each Indian car generated in 2018

Considering that tax rates for different segment of cars is different, the calculation has to be based on ex-factory prices and not ex showroom.
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Old 3rd April 2019, 15:11   #14
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Would it be possible to know how much exotic cars generate? Lamborghini Banglore alone has given 12 deliveries in 2019 Once we take the overall numbers, they can easily beat many of the struggling brands.
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Old 7th April 2019, 10:01   #15
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Default Re: How much revenue each Indian car generated in 2018

Quote:
Originally Posted by JoshMachine View Post
Is this just a static point observation or is there a trend to it, couldn't locate it on the source website?
Reason being - difficult to ascertain movement without a pattern of sorts over a time period.
-Average price tag of cars sold in India is around ₹ 7.7 Lakh

Here are some more data,
- Dzire becomes the most sold car now, followed by Baleno.

- Entry level hatch- Alto comes third.

- All cars in the entry level segment post negative growth, with two exiting the market ( Eon and Nano)

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