How Maruti Suzuki generated industry beating margins with volume cars?

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Journey from stagnant unit sales and average profit margins
Maruti Suzuki recorded stagnant unit sales during FY13 (up 3.3% y-o-y) and FY14 (down 1.4% y-o-y). EBITDA margin stood in the range of 8% to 11% during FY13 and FY14.

… to industry beating growth rates
India’s top car manufacturer witnessed a substantial improvement in both unit sales growth and margins during the past 3-years. Annual unit sales growth was in the range of 9-12% during FY15 to FY17. At the same time, EBITDA margin has also improved from 10.9% in FY14 to 15.2% in FY17.

Maruti Suzuki’s progress over the past 10-quarters

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Maruti Suzuki’s new strategy (to launch a slew of premium cars) pays off
A surge in car volumes together with an increase in premium model mix helped Maruti Suzuki to expand its EBITDA margin by 433 basis points over the last 3-years. A spate of new car launches over the past 3-years improved Maruti Suzuki’s premium model mix to 25.15% in Q4FY17 when compared with 5.08% in Q4FY14.

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India’s top car manufacturer enjoyed the highest operating margin among the top 20 global OEMs for the financial year 2017.

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