Tata is making more money per car than Maruti for the 1st time in a decade

Until last year, you could have answered that off the bat. Not any longer as TaMo, among the biggest gainers in the automotive pack this year, now makes more per vehicle in a market where one out of every two cars still sports the Suzuki badge.

Tata Motors’ operating profit per car rose to ₹45,810 in the second quarter, nearly double that of Maruti, data compiled by ETIG showed. This was the first time in a decade that Tata Motors made more money per car than did the market leader Maruti Suzuki.

Operating margins at the Tata Motors PV division rose to 5.2%, a gain of 110 basis points in the second quarter of FY22, while the metric fell 50 basis points to 4.2%, a multi-quarter low, at Maruti. Of course, the pandemic-stricken quarter in the first Covid wave has been kept out of the equation.

Operating profit of the Tata Motors PV business is equivalent to 45% of Maruti Suzuki in the September quarter, while volumes sold by the maker of Nexon and Harrier are 22% of those at Maruti.
Thanks to continued improvement in the volume aided by the operating leverage, Tata Motors’ PV business has been posting positive EBITDA margins for the last five quarters in a row.

Tata’s outperformance is on account of strong demand momentum and flexibility and agile production and supply chain management. This was backed by R&D efforts that quickly introduced re-engineered products relying on standard chipsets. Doing so ensured better supplies. To be fair, it is a tale of different growth trajectories. Tata Motors is right now at its peak – on capacity utilisation and volumes expansion, whereas Maruti’s operational performance is bottoming out. But with the rollout of new products and improvement in chipset supplies, Maruti Suzuki is likely to build on its operational performance.

Two contrasting halves

While volumes at Tata Motors grew 53% to 84,000 units in the September quarter, Maruti’s volumes contracted 1.2% in the same period, pulled down by a shortage of parts, which affected the output by over 116,000 units.

Wholesale volumes at Tata Motors in the last quarter reached the highest in 33 quarters. So, the market share of Tata Motors rose to 11.3% in September 2021, compared with 8.2% in FY21, whereas due to lack of availability of parts, Maruti’s market share has slipped. Due to higher share of SUVs in its product mix, realization at Tata Motors was at ₹8.8 lakh per vehicle, much superior to the mass market focused Maruti Suzuki’s average realization at ₹5 lakh.