Indian car-makers cruising in top gear

The Indian automobile industry continues to accelerate at a rapid pace. The strong momentum witnessed in FY23 (highest-ever passenger vehicles sales) has seamlessly transitioned into the first quarter of FY24, evident in the Q1 FY24 performance of four-wheeler car manufacturers.

As shown in the tables, the higher passenger vehicle (PV) sales were the primary growth driver for the industry. The industry-wide strong performance has also won the auto manufacturers the market's favour, with the stock prices of all three major companies reaching their all-time highs in July.

Let's delve into the performance and business strategies of each of these companies.

Mahindra & Mahindra (M&M): Reigning supreme in the SUV realm
M&M has long been associated with its prowess in manufacturing SUVs. The company's management has consistently focused on expanding its SUV portfolio in India, a strategy that has proven to be immensely successful. In FY23, M&M achieved its highest-ever total automobile sales, selling a remarkable 6.98 lakh units. Notably, the company's tractor sales also reached record levels. M&M stands as the leading SUV seller in India, commanding an impressive market share of approximately 19 per cent in the SUV segment. Alongside strong sales, the company reported industry-leading metrics in FY23, including a return on equity (ROE) of 22.1 per cent and an operating margin of 13.1 per cent.

Maruti Suzuki: From utility to premium
Maruti Suzuki retained its position as India's largest car manufacturer in FY23, achieving a historic total sales figure of 19.6 lakh units in the PV segment. The company also accomplished its highest-ever export numbers, totalling 2.59 lakh units in FY23. Notably, Maruti Suzuki recorded its peak ROE (13.1 per cent) and operating margin (6.85 per cent) in FY23 since the onset of the pandemic in FY20. The share of SUVs in the total PVs sold increased to 22.8 per cent in FY23, compared to 15.4 per cent in FY18, signifying the ongoing trend towards premiumisation.

Tata Motors: Crafting a resurgence narrative
After reporting net losses for the previous two financial years, Tata Motors staged a comeback in FY23, returning to profitability. The company achieved record sales of 5.23 lakh units in the PV segment, reflecting a remarkable growth rate of over 40 per cent compared to FY22. Tata Motors has consolidated its position as India's leading EV car manufacturer, boasting a market share of approximately 80 per cent in the EV segment during FY23. Beyond its domestic success, the revival of China's economy following pandemic-related restrictions proved advantageous for Tata Motors, as its JLR (Jaguar Land Rover) business also achieved profitability in FY23 due to increased sales and improvements in the supply chain.