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Old 1st December 2020, 17:19   #1
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Default Kia achieves operating profit in just 1 year

Kia has become one of the quickest carmakers to turn operationally profitable in India.

Kia achieves operating profit in just 1 year-2020kiasonet02.jpg

Kia has achieved operational profitability in just the first year of operations. By the end of the last fiscal, the company’s operational profit stood at Rs. 308 crore. Operating profit is the profit before interest and taxes.

During this period, the carmaker produced more than 1 lakh vehicles and posted a revenue of Rs. 10,838 crore. Meanwhile, the company has said to have invested Rs. 8,771 crore till now.

Kia achieves operating profit in just 1 year-2019kiaseltos01.jpg

The company recorded a net loss of Rs. 326 crore (including interest and depreciation costs) during the same fiscal.

In FY2020, Kia posted an operating profit margin of 2.9%, while the average revenue per vehicle was at Rs. 10.20 lakh. This figure is 1.5-2.0X of market leaders Maruti Suzuki and Hyundai.

Meanwhile, the carmaker sold 21,022 units in November 2020. Once again, the Sonet became the best selling model in the sub-4 meter SUV segment with total sales of 11,417 units.

Source

Link to Team-BHP News

Last edited by TusharK : 1st December 2020 at 17:20.
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Old 1st December 2020, 17:50   #2
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Default Re: Kia achieves operating profit in just 1 year

I hope this post is star marked and available to everyone who keeps refering to the losses automakers run into in India.

In spite of such profits even Kia decided to short change the Indian customers by trimming out the structural components and strength.

So it's evident that more than economics its about business and if I may say greed to push out the profit margins leveraging the absence of regulations and controls.

It's so unfortunate there are very few honest automakers who would honour the faith and belief of the Indian customers and not short change them.
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Old 1st December 2020, 18:32   #3
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Default Re: Kia achieves operating profit in just 1 year

That is a commendable and outstanding achievement by Kia. From a newcomer to two of the most popular cars in the hot segments, they deserve a huge applause! .

Some global manufacturers who have been around for a decade here are still searching for that 'X" factor car!. While KIA have two in just a year's time. Brilliant!.

All the best to them!.
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Old 1st December 2020, 19:50   #4
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Default Re: Kia achieves operating profit in just 1 year

Truly great work by them. They have delivered two outstanding products, feature loaded and decently priced. It is no surprise that KIA are performing so well financially, and the numbers of the Seltos and Sonet are dominating.

Congrats KIA on managing to launch products the right way!

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Some global manufacturers who have been around for a decade here are still searching for that 'X" factor car!
Totally agree! The fact that they choose the perfect segment and delivered two smash models is commendable
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Old 1st December 2020, 19:58   #5
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Default Re: Kia achieves operating profit in just 1 year

While Kia has done exceptionally well with their strategies, product, positioning and basically their entire strategy, this news makes me wonder more about the kind of profit margin they're making on the Seltos which probably contributed the major share of revenues, and by proxy profits, considering Sonet is relatively new.

Does anyone have an idea on the kind of profit% they rake in on the Seltos?
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Old 1st December 2020, 20:29   #6
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Default Re: Kia achieves operating profit in just 1 year

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Originally Posted by adityak7 View Post
Does anyone have an idea on the kind of profit% they rake in on the Seltos?
Since Maruti is a listed company, they actually mention the cost of raw materials & components in the Annual Report. It is approximately 70% of total sales. That is, average profit margin on a Maruti car is around 30%.

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Expensive cars like Seltos will have higher margins obviously
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Old 1st December 2020, 20:38   #7
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Oh Kia! You owe me a friend!

Story time now. 4 weeks back, my bestie rang me up and said ‘ I need a Seltos, any color would do, I want it before my wedding on 21st Nov’.

Apparently none of the dealers in his place could arrange the vehicle on time, so the task of finding a car and taking it Banglore before 21st was bestowed upon me. Didn’t think much of it, coz a very dear friend was working in Kia, so easy peasy, or so I thought.

He managed to find a vehicle ready stock in Gray color, and the exact variant my friend was asking for. Bingo! Got the delivery in 2 weeks time, and entrusted a friend to drive it down to Banglore. I remember him complaining about the engine being lazy and dead in 2nd and 3rd, but didn’t seem to think much of it since we both drive diesel cars and find most petrol cars really lacking.

Wedding went well, all cakes and smiles, but just one small niggle...!! The car started making this really weird noise while shifting to 2nd and 3rd, and started crawling while driving the newly weds to the grooms house

Oh, how smiles fade and faces turn pale! How an elderly fathers pride drowns in embarrassment and a sea of raised quizzical eyebrows. Such a sad thing to watch.

The car stopped responding to gear shifts and throttle inputs, just gnarled louder and louder. The only sensible option was to sent the bride and groom home in a different car, instead of causing more damage to the car.

The car was towed to the Kia Service Center, and we were informed that there was ‘some sorta’ damage in the transmission system ( in a car that barley did 1000 kms). It would take a week and some to rectify the issue is all they cared to say.

Came home and informed the groom and his father, soon all uncles from both sides joined the discussion to play Sherlock. ‘This is clearly a case of them pushing a damaged car, didn’t you check the car properly enough?’ drew the first blood. ‘Did you rash drive it on your merry ride to Banglore’ was the killing blow.

It’s been a week now, and the car is still at the service centre.

I know how you did it, Kia.
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Old 1st December 2020, 20:55   #8
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Default Re: Kia achieves operating profit in just 1 year

With mainly the Seltos and Sonet, Kia has achieved this !

What are the other manufacturers doing ? Is it that hard to come up with such two products ? I am looking at Honda and Toyota who have immense R&D and global products.
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Old 1st December 2020, 22:17   #9
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Default Re: Kia achieves operating profit in just 1 year

Kia entered the Indian market with "guns blazing" and with a "dive right in" attitude. I think those who have been around and not tasted even 5% of Kia's success must emulate Kia and put the right foot forward like they did in order to succeed. Kia's has a fantastic product line up and awesome mix of variants and most importantly their "Diesel-Automatic combo" and great features in the top variant was what the market was begging for, comparatively Hyundai's line up appears 'insipid': looks like they are holding back so that Kia can taste success. Only wish Kia enters the hatchback and sedan segment to really shake things up and also bring some sporty models that are also affordable.

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Old 1st December 2020, 22:45   #10
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Default Re: Kia achieves operating profit in just 1 year

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Originally Posted by RR1108 View Post
Oh Kia! You owe me a friend!

Oh, how smiles fade and faces turn pale! How an elderly fathers pride drowns in embarrassment and a sea of raised quizzical eyebrows. Such a sad thing to watch.

The car stopped responding to gear shifts and throttle inputs, just gnarled louder and louder. The only sensible option was to sent the bride and groom home in a different car, instead of causing more damage to the car.

Came home and informed the groom and his father, soon all uncles from both sides joined the discussion to play Sherlock. ‘This is clearly a case of them pushing a damaged car, didn’t you check the car properly enough?’ drew the first blood. ‘Did you rash drive it on your merry ride to Banglore’ was the killing blow.

It’s been a week now, and the car is still at the service centre.

I know how you did it, Kia.
Congratulations to your friend!!! Hope he has a great married life ahead.

Now coming to the situation. I think it was the car's/God's way of saving the groom and the groom's family from the evil eye/nazar of relatives and other people who might have thought that how much money the family has or how they are splurging on the wedding.

This incident would make them think it was not a new car or the family must have borrowed it from someone.

I know we have come way ahead of all these believes but I think everything happens for a reason and this is how I would have thought of the situation had it happened with me.

And coming to relatives saying that you should have checked the car properly its completely expected since they always need something to complain about in this case since the events were a smooth sailing they thought why not make a fuss out of this situation then.
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Old 1st December 2020, 23:10   #11
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Default Re: Kia achieves operating profit in just 1 year

If they had slightly reduced their profits per car and provided a structurally safe offering - at least for premium offerings like the Seltos - the brand image would still be intact! Sure it may have reduced the profits - but would have been brilliant for the brand in the long run.

Kia's entry into the Indian market is one to be studied in textbooks! They didn't make one wrong move for 1 year and 2 months - with two blockbuster launches like the Seltos and Sonet. However, karma caught up in the form of NCAP. The brand is being taken to the cleaners on social media ever since, especially after Thar showed the market how even offroaders could do it right! If nothing - fix those brakes at least, Kia!

Sales may not be impacted, profits may not be impacted, but brand image sure did get, at least in quite a few circles! From the badass image built in a year to the joke of social media in a day and further on - like elders say, not every decision should be about profits.
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Old 1st December 2020, 23:19   #12
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Default Re: Kia achieves operating profit in just 1 year

I would call it a very commendable effort from Kia. Not considering how much money they might have, but considering how well they spent it in India

They were the newest entrants. They had to create their Brand name. They did that in very quick time. Seltos was just another Creta, which looked a little aggressive.
But to make fortunes on just one car, takes a lot of planning and execution.
Setting up plant, partnering with dealers, finding the right real estate.

They were basically squeezing between all the other dealers/ Manufacturers, but still stood out. New showrooms would have had the advantage of looking most modern, but to hire the right sales folks, to give the experience, and getting it right would all have been tricky.
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Old 1st December 2020, 23:22   #13
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Default Re: Kia achieves operating profit in just 1 year

Quote:
Originally Posted by adneo View Post
In spite of such profits even Kia decided to short change the Indian customers by trimming out the structural components and strength.
Quote:
Originally Posted by CrAzY dRiVeR View Post
However, karma caught up in the form of NCAP. The brand is being taken to the cleaners on social media ever since, especially after Thar showed the market how even offroaders could do it right! If nothing - fix those brakes at least, Kia!
Exactly, if Kia would have given more emphasis on safety for Indian models, it would have been beneficial for the brand in the long run. These are not cheap cars. Even if numbers are small, some people are there looking for safety and when some manufacturers are doing right things in building safer cars for India, relatively new brand like Kia could have been an example.
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Old 2nd December 2020, 00:35   #14
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Default Re: Kia achieves operating profit in just 1 year

At the other end of the spectrum we have Skoda who thinks selling decade old models is the only path to profitability.

Well done Kia! A text book entry
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Old 2nd December 2020, 01:19   #15
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Default Re: Kia achieves operating profit in just 1 year

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Originally Posted by RR1108 View Post
Oh Kia! You owe me a friend!

I really hope the friend that you lost is the one that works at Kia, and the one that off-loaded a lemon onto you, and not the one who was recently married, who happens to be as much a victim as you.

PS: does the seltos come with a hydraulic clutch? If yes, then it might be a master clutch cylinder leak.
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