[pqr]

• SKODA Auto Volkswagen India Private Limited (SAVWIPL) has started disclosing annual financial results in form of three main financial documents - Balance sheet, P&L statement and Cash flow statement
• Information is available on their website: https://www.skoda-vw.co.in/compliance/
• Reason for disclosure as stated in the document is as below
• “The borrowings as at March 31, 2022 include INR 6,937.17 million (INR 4,440.93 million for the year ended March 21, 2021) by issue of Commercial papers. Of these, commercial papers aggregating INR 5,000.00 million have been listed on BSE as per SEBI Circular SEBI/HO/DDHS/CIR/P/2019/115 dated October 22, 2019. The Company has been legally advised that Commercial papers are not covered under the definition of “Securities” as per Companies Act, 2013. Further, considering the amendments in the definition of Listed Company as per Section 2(52) and consequent clarifications provided under Companies (Specification of definitions details) Rules, 2014, via Rule 2A: "Companies not to be considered as listed companies", Private companies which have not listed their equity shares on recognised stock exchange and have only listed issued certain debt instruments (securities) are not to be considered as Listed Companies. Accordingly, the Company will not be considered as a listed company in accordance with the provisions of the Companies Act, 2013.”

• Some key financial results are as below:

• Other available documents on their website are as below:

• Director Resignations Rule15 & AGM-Notice_2022: As per both documents - Mr. Zachary Hollis (Skoda Auto India) and Mr. Ashish Gupta (Volkswagen India) are no more Directors on Board of SAVWIPL, effective from 30th June 2022. Mr. Christian Cahn von Seelen replaced them as new Executive Director on SAVWIPL Board, and both continued to report to later as respective Brand Head.
• Director_Resignations_Rule15_30062022.pdf
• [ATTACH=AGM-Notice_2022.pdf]2340019[/ATTACH]
• [ATTACH=Financial-Results-March-2021-UNS.pdf]2340008[/ATTACH]
• [ATTACH=SAVWIPL_Financial-Results-M22.pdf]2340009[/ATTACH]

[achyutaghosh]

Interesting set of numbers. Revenues went up in FY22 but profits tumbled due to added cost of new models- launch, marketing, manufacturing etc. Having said that, the cars are already super high priced, so what would be a sustainable profit margin for a company like Skoda-Volkswagen? And what do they need to do to get to that?

[pqr]

Makes me wonder, why Gurpratap Boparai left a ₹ 12,500 crore big organization’s (poised to grow further) Managing Director position (31st December 2021), to take up a small CEO role within Mahindra automotive division’s (FY20 revenue ₹ 28,824 crore) loss making European operations (Automobili Pininfarina and Peugeot Motorcycles).

At SAVWIPL, he used to report to Skoda Auto’s global CEO, but now he is not even reporting to the Managing Director of M&M. Seems like a big demotion for him, what gives? Was it related to the fuel pump failure incident in several new cars?

Recently Zachary Hollis (Skoda Auto India) and Ashish Gupta (Volkswagen India) were also removed from SAVWIPL’s Board. Maybe a business journalist can do a story on this topic, which would be an interesting read.

M&M revenue breakup



M&M International subsidiary



[ATTACH=MM-Annual-Analyst-Meet-2021-Presentations-deck-28th-May-2021.pdf]2340160[/ATTACH]


Source: https://www.mahindra.com/resources/i...h-May-2021.pdf

[svmvale]

Originally Posted by achyutaghosh

Interesting set of numbers. Revenues went up in FY22 but profits tumbled due to added cost of new models- launch, marketing, manufacturing etc. Having said that, the cars are already super high priced, so what would be a sustainable profit margin for a company like Skoda-Volkswagen? And what do they need to do to get to that?

Investments towards tooling for the new MQB0IN platform has been last year. This is a major reason for the reduction in profits.

One of the best ways to improve profitability is increase sales numbers. This can be done by under cutting the koreans. Kushaq + Taigun sales is only 25% of Seltos + Creta combo.

Slavia & Virtus 1.5 DSG is 4L more expensive than City Zx CVT. I don't see justification on that much premium. Agree they're creaming the market. Still Slavia + Virtus numbers are much lower than Citys.

I love my Vento TDi DSG. Hope VAG do the right thing in terms of volume and stay relevant in the market.

[sunikkat]

Originally Posted by svmvale

Slavia & Virtus 1.5 DSG is 4L more expensive than City Zx CVT. I don't see justification on that much premium. Agree they're creaming the market. Still Slavia + Virtus numbers are much lower than Citys.
.

For each their own, but for me 1.5 DSG is totally worth 4 lakhs above City CVT for that sweet engine alone

And in June City did 3292 units, while VAG twins did 4615 units (Slavia - 2765, Virtus - 1850). So that second statement is wrong, as VAG together are doing higher units than City (including hybrid).

[svmvale]

I apologise, for the second set of numbers.

My Vento TDi DSG is 5 years old and have clocked 1,10,000 kms. Have done a good mid life overhaul. Very happy with the sporty DSG. Going to keep it for further years and upto 1,50,000 kms.

I drove my friend's 5th Gen City Zx CVT & Virtus 1.5 DSG:
1.5 DSG is a jewel of an engine and gearbox combo. It's a hoot.
But the 5th Gen City is so well put together as well. Value wise, i find it hard to justify 4L premium over the Virtus 1.5 DSG. Fuel economy for both will hover around 12 kmpl only.

VW skipped on auto up-down for all windows - that's there Vento from 12yrs ago.

If money is not a question, i would go for Virtus 1.5 DSG without question. For 4L premium - i doubt it.

[JoshMachine]

Originally Posted by achyutaghosh

Revenues went up in FY22 but profits tumbled due to added cost of new models- launch, marketing, manufacturing etc.

Originally Posted by svmvale

Investments towards tooling for the new MQB0IN platform has been last year. This is a major reason for the reduction in profits.
---
One of the best ways to improve profitability is increase sales numbers.

To start with, there is a good deal of information available on TBHP to sift through such data points.

Manufacturing, being a very high capex industry, typically goes through a sinusoidal wave of revenues and operating margins + associated profits. Companies initially invest a lot for ideation, design, prototype, testing and final production. Marketing/branding also costs a lot.

Here are some graphs depicting the said numbers, though they are dated.

Operating income trends:-



PAT trends:-



Source

And while we are on the subject, here's an interesting and related data point, that of dealer margins for various OEMs:-



Source

[achyutaghosh]

Originally Posted by JoshMachine

And while we are on the subject, here's an interesting and related data point, that of dealer margins for various OEMs:-

This dealer margin chart may seem surprising, with Toyota at the bottom, especially with the popular video/infographic that was floating around on how Toyota gets a measly part of the car value, while taxes and dealers make up big numbers. But then average selling price of a Toyota would be pretty high, so the 2.XX% margin may translate to a higher amount on a per car basis as compared to say the 5% number for MSIL.

[JoshMachine]

Originally Posted by achyutaghosh

This dealer margin chart may seem surprising, with Toyota at the bottom, especially with the popular video/infographic that was floating around on how Toyota gets a measly part of the car value, while taxes and dealers make up big numbers. But then average selling price of a Toyota would be pretty high, so the 2.XX% margin may translate to a higher amount on a per car basis as compared to say the 5% number for MSIL.

The higher ticket price is surely one important dimension.

Or is it also a case that car (Fortuner, Crysta etc.) volumes are quite predictable (guaranteed?) for the dealers, that both - dealers and Toyota, have come to terms with such low margins?

I think, the dealer margin system also carries the dimension of the effort that the dealer has to make, to actually sell the car.
In Toyota's case, we know it is hardly any. The product takes care of that already.

[ajayc123]

Originally Posted by JoshMachine

And while we are on the subject, here's an interesting and related data point, that of dealer margins for various OEMs

I found that the VW / Skoda dealer margins are missing from this. Why so ?

[JoshMachine]

Originally Posted by ajayc123

I found that the VW / Skoda dealer margins are missing from this. Why so ?

...because the source quoted didn't have any

Did some digging and here's what I could find, almost all OEMs at one place now:-



Source, this is dated Jun'20.

Since this thread is primarily about Skoda/VW, one can notice that Skoda pays one of the highest dealer margins amongst OEMs.

[CafeRacer16]

I am curious as to how their 'Net Profit Margin%' & 'FY Profit after Tax' were highest in the peak covid year and with just old PQ platform & some imported cars to sell

[PrasunBannerjee]

Originally Posted by CafeRacer16

I am curious as to how their 'Net Profit Margin%' & 'FY Profit after Tax' were highest in the peak covid year and with just old PQ platform & some imported cars to sell

My guess is, since the old platform has already recovered its investments, hence there were higher margins, hence they didn't miss an opportunity to keep milking it. And for a while, rapid had been one of the most VFM sedans sold in the country. That greatly helped. Even in my city, I started seeing a lot more rapids than the yesteryears due to the same.

[thanixravindran]

Originally Posted by CafeRacer16

I am curious as to how their 'Net Profit Margin%' & 'FY Profit after Tax' were highest in the peak covid year and with just old PQ platform & some imported cars to sell

Originally Posted by PrasunBannerjee

My guess is, since the old platform has already recovered its investments, hence there were higher margins, hence they didn't miss an opportunity to keep milking it. And for a while, rapid had been one of the most VFM sedans sold in the country. That greatly helped. Even in my city, I started seeing a lot more rapids than the yesteryears due to the same.

Correct and hence the term cash cow i.e. revenue accruals from past investment. But this is dangerous if new investments are not made to produce new cash cows as the existing one will soon enter demise phase. Most product organization's measure 'vitality index' which shows how much is the share of new product revenue of total revenue of each year. It is comparison of new product revenue with cash cows.

Now coming to this P&L, apart from stopping the cash cows, I guess India 2.0 project is the only major investment and is around 8000 crores out of which major R&D expenses would have been expensed in the early years (development time) and capital expenditure (factory and tools) started getting amortized resulting in distorted cash flow. Generally listed companies avoid this by spreading investments and across multiple projects as well phase overs that doesn't skew the cash flow.

[sahil.vwpolo]

I am not at all a financial expert.

I recently purchased a VW Virtus DSG and here is what i saw as price breakup

Pre Tax price of car - 12.5 L (approx)
Pre Regn taxes - 05.41L (approx)

Road Tax - 03.50L ( TS 2nd vehicle )
Insurance - 00.60L

-----------------------------------------

Now if i take away dealer commission of 3.70 as mentioned in of the charts -> dealer commission is around 63K

so the manufacturer gets about 11.87 lakhs

I see a lot of comments everywhere about cars being overpriced, but at 11.87 lakhs revenue, VW needs to recoup R and D, factory and material costs ..

i dont think they can keep manufacturing of a DSG down to less than 10 lakhs at all, since the engine and trans is still imported..

so i feel that the manufacturer has priced it reasonably.

what shocks me, is the amount of tax government collects.

I will agree that 20 years back, car was a luxury. In 2022, car is a compulsion, a necessity... When will government stop extortion in a car purchase.. GST, CESS, Road Tax .. our taxation even beats developed western countries.


Imagine, if total tax on car, as in, all inclusive tax for a sub 20 lakh car is limited to 30% overall, then a 20 lakh onroad car would give 15 lakhs to manufacturer.. then manufacturers can either increase safety,features or decrease showroom price.

But i dont think any party who comes to power will ever think of benefits of middle class people.