Hyundai Motor India overtook the mass-segment leader Maruti Suzuki last year on operating margins. Hyundai Motor India’s operating margins surpassed for the first time in almost a decade. With the strong demand for cars like Hyundai Creta and Hyundai Venue increasing in the market, Hyundai is making a lot of money on high-margin sports utility vehicles.
In the fiscal year 2021, Hyundai Motor India sold about half the number of cars compared to Maruti Suzuki India. Even so, Hyundai India is closing in on the revenue and profitability of Maruti Suzuki India. Hyundai Motor India’s revenue rose by 5% annually between FY16 and FY21, which is faster than Maruti Suzuki’s growth of 3.38%.
Hyundai India’s operating profit fell 2.5% to Rs 4,174 crore in FY21, even though the sales volume fell by 12%. The sales dropped due to the pandemic-related lockdown and complete shutdown of the showrooms and plants in 2020.
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The revenue from Hyundai Creta also dropped by 5.3% to Rs 40,674 in FY21 and the profit after tax dropped by 21% to Rs 1,847. According to Hyundai India’s filings with the Ministry of Corporate Affairs shared with ET.
Hyundai’s higher operating leverage, better management of raw material cost and lower cost of other expenses helped Hyundai to improve its profitability. Hyundai profits Rs 74,471 per vehicle in FY21, which is nearly double what Maruti Suzuki achieved in the same period.
Maruti Suzuki’s profit margin fell into a single digit for the first time in nine years. Whereas Hyundai Motor India operating margin rose to reach 10.26%. Interestingly, the operating profit of Hyundai was 78% in FY21 compared to the previous five years’ average of 42%. During the same period, Hyundai sold just 39% of the cars sold by Maruti Suzuki.
Maruti and Hyundai to launch new cars
Both Maruti Suzuki and Hyundai are preparing to launch new cars in the Indian market. Hyundai India recently launched the performance version of the hatchback i20. It is known as the i20 N-Line. The South Korean manufacturer will also launch the facelifted version of the Creta that will come with a longer list of features including ADAS. The manufacturer is also working on a slew of electric cars and will launch a new affordable electric car in the Indian market sometime in 2023.
Maruti Suzuki, on the other hand, will soon launch the all-new Celerio, an entry-level car in the market. Maruti Suzuki will also launch cars like Jimny in the market next year. Unlike the other manufacturers, Maruti Suzuki has decided to focus on alternative fuel products like CNG while it will not launch an electric vehicle in the Indian market anytime soon.
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