Kia Motors India Gets Really Close to Tata Motors Last Month

In the last few months, the automotive market of India has showed strong signs of recovery. While the car market was severely hurt by the national lockdown, the improved buying sentiment seen in the last few months, especially around the festive season, has boosted the sales figure of most car manufacturers significantly. Kia Motors India, despite being a newcomer in the market, has registered an impressive sales even with its small range of the vehicles.

Kia Motors India is now one of the most succesful car brands in India. The company is currently running a product line-up of only three vehicles, including the Kia Seltos, Carnival and recently-launched Sonet. All of these models are contenders in the utility vehicles segment.

In October, Kia Motor ranked fourth in the monthly sales charts, outselling other veterans like Mahindra and Toyota. In the same month, it registered 6.3 percent of the total sales in the car market. If we break down the sales segment-wise, the South Korean car manufacturer held 13-15 percent shares of the utility vehicle segment. Kia first entered the market last year in August with the Kia Seltos. Within a year in the market, Kia has manufactured 1 lakh units and gained a revenue of Rs 10,838 crores. A majority of the total sales came from the Kia Seltos. The MPV Kia Carnival might have registered only a few hundreds units sales. The latest model of the product line is the Kia Sonet which could not contribute much to the total sales since it was just launched in September.

It is incredible how Kia Motors manages to generate profits despite all the turmoil and hardship happening this year. Kia has become the quickest car maker to operate profit in India. By the end of the financial year 2019, Kia got an operating profit of Rs 308 crores. Taking the interest and depreciation into account, the net loss stood at Rs 326 crore for the year.

In combination, Kia and Hyundai posted a total market share of 23-24 percent, which equals to 63 percent of market-leading Maruti Suzuki’s share. Kia’s investment costs Rs 8,771 crore. The average realization in FY20 is Rs 10.2 lakh per model, which is 1.5 to 2.1 times higher than those of Maruti and Hyundai. Considering the revenue alone, Kia Motor has equalled Tata Motors’ passenger vehicle line-up. However, things are different if we compare the profit margins of the two. While Kia registered a profit margin of 2.9 percent in the financial year 2020, Tata’s number is a negative 9.8 percent. Maruti Suzuki and Hyundai reported an operating profit margin of 9.7 percent and 10.06 percent.

It is expected that in the fiscal year 2021, Kia will achieve higher results. It aims to sell around 2 lakh cars, which is estimated to generate a profit of Rs 17,000 crore. It is an impressive and unprecedented number for a one-year-old car company in the market. At this growth rate, it is likely that Kia will soon beat Tata Motors to become the third-largest car brand in India.