Two Wheeler OEMs much profitable than Car OEMS!

While the cost of a passenger car is much higher than a 2-wheeler; the Bike/Scooter OEMs have surpassed the Car OEMs by a decent margin. We have always been amazed by the dynamics of the Automotive Industry and this business performance dazzles us even more. There is a tremendous influx of Global Passenger Car OEMs in the Indian Automotive Space, but many of the existing companies are suffering with tremendous losses. And the way forward for the incoming companies is not easy either.

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Source: Business Standard

Car OEMs considered for the above calculation – Maruti Suzuki, Tata Motors, Mahindra & Mahindra, Hyundai Motors India, Honda Cars India, Toyota Kirloskar and Ford India.

2-wheeler OEMs considered – Hero MotoCorp, Bajaj Auto, TVS Motors, Eicher Motors and Honda Motorcycle & Scooters India.

Majority of the Two-wheeler OEMs debts are under control and have a healthy balance sheet. Whereas, the debt levels of Car OEMs are mind-boggingly high. It is also attributed by extremely high investments made by carmakers in setting up the manufacturing facility and exorbitantly high New Product Development costs.

Amongst all automotive companies (4-wheelers), only Maruti Suzuki seems to be in a financially strong position. Also with The Indian Policy makers penalizing the car buyers with hefty taxes, the automotive space is under tremendous pressure to perform. These are the following taxes that a car buyer has to bear as of date –

  • Excise Duty
  • Central Sales Tax (CST)
  • R&D Cess
  • Education Cess
  • Value Added Tax (VAT)
  • Octroi/Entry Tax
  • National Calamity Contingent Duty
  • Road Tax
  • Swachh Bharat Cess
  • Service Tax

Apart from these taxes, from 1st June the customer needs to pay additional 1% as Krishi Kalyan Tax (for cars >Rs.10 Lakhs)! So, while the Modi Government is pushing for Make in India we believe that not much adequate steps are being taken to support the OEMs.

2 thoughts to “Two Wheeler OEMs much profitable than Car OEMS!”

  1. That’s really surprising.
    While car industry gives utmost focus for quality, th 2 wheeler industry focus is on cost.
    Thus it is bound to happen due to the volumes.

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