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Honda Cars India, the maker of the City sedan and Elevate SUV, reported a 16% jump in revenues, propelled by record-breaking export shipments, resulting in a total income of ₹16,461 crore for FY24.
However, net profit declined by 52% year-on-year to ₹661.41 crore, primarily due to a substantial tax credit of ₹576 crore that had bolstered earnings in the previous year, as noted in the company’s annual filing with the Registrar of Companies.
Profit before tax rose by an impressive 25% year-on-year to ₹1,029 crore in FY24, marking a multi-year high, and revenue figures reached their peak in the past six years.
The company’s sales volume expanded by 8.8% to 124,244 units in FY24, achieving a five-year high, driven by an unprecedented export volume of 37,660 units—a 65.4% increase. With an enriched product lineup, the average selling price rose to ₹ 13.2 lakh in FY24 from ₹12.4 lakh in the previous year. Honda Cars India has made notable strides in cost control concerning raw materials and employee expenses, contributing to a higher operating profit per vehicle.
The gross margin expanded by 36 basis points to 31.88% in FY24, marking the fourth consecutive year of consistent margin growth. In FY21, the company’s gross margin had reached a nadir of 27.20%, but it has steadily improved year after year since. Currently, the company secures a gross profit of ₹422,449 per car and an operating profit of ₹139,667 per car.
Reviewing the FY24 earnings, the Director’s note stated that 2023-2024 was a ‘year of growth’ for the Indian automobile industry, and it retained its place as the third-largest auto market in the world.
During FY’24, total passenger vehicle sales stood at 4.2 million units, accounting for an 8.4% growth, surpassing the 3.9 million units clocked during the same period last year. Honda Cars India, for its part, sold 86,584 units in the previous financial year, posting a 5% decline in sales. This was despite the entry of its mid-size SUV Elevate into the fast-growing segment.
The company believed that the model had received a good response in the market and had positively impacted the earnings of the last financial year.
“The year marked Honda’s strong entry into the booming SUV segment in India, with the launch of its latest global model, Honda Elevate. India became the first country to produce and sell the model in September 2023. The Elevate got a very good response from the market, and customers appreciate its bold SUV design with strong road presence, outstanding space and comfort, advanced safety offering, and well-appointed features,” the Director’s report added.
The company managed to grab some share in the mid-size SUV segment. Still, the overall segment volumes for sedan declines pulled Honda Cars India’s overall market share from 2.4% in FY23 to about 2% in FY24, a growing year for the passenger vehicle market. This share has further fallen below 1.5%
Honda Cars India will rely on the new Amaze, scheduled for launch in December to regain back some lost share even as the segment is still under stress.
The overall positive sentiments, improvement in supply chains, rising income levels, urbanisation, etc., primarily contributed to the market’s growing momentum in FY24. The company believes the Indian economy “will continue to grow steadily.”
While the company faced intense competitiveness in the SUV space and falling sedan segment volumes in India, the country’s role as an export hub emerged as a critical development in FY24.
There is a “growing importance” of Indian operations in Honda’s “global business, and the focus is to make “India a key export hub.”
“FY 23-24 marked another significant milestone in the company’s journey. HCIL started its first-ever exports from India to Japan of its ‘Made-in-India’-Honda Elevate under the brand name WR-V, showcasing India’s manufacturing prowess and global competitiveness. The company clocked its highest-ever export volume with 37,660 units,” the note stated.
The overseas volumes grew by over 65% during the last financial year. Furthermore, the export of parts and components stood at ₹1,167 crore during the financial year, adding to its operational performance.
The company’s financial filing noted that during the last financial year, it invested about ₹737.8 crore in capital expenditures on buildings, plant and machinery, equipment, vehicles, computers, furniture, computer software, etc.
Given that the volumes are consolidating, the dealership is also moving in tandem at 312 facilities in 229 cities during the financial year 2023-24.
The slip in profit in FY-24 comes after the company swung back to healthy profits in FY-23, having faced losses two years before. Honda Cars India had reduced its break-even levels, rationalizing production capacity after shutting down the Greater Noida factory and reducing its workforce.
“Optimization/allocation of manpower as per the required skill set and effective utilization of resources were done to ensure the company’s sustainable growth. Further, the Company continues to take new initiatives to meet challenging business situations in its continuous endeavour to become a high-performing organization,” the director’s review report stated.
In FY 2023-24, the company said its focus was to maintain and sustain a lean manpower constitution by lowering attrition from FY 2022-23 and retaining existing manpower.
“The 100 thousand (100K) break-even point manpower constitution, along with the management constitution, was maintained based on the ‘Pay for Role’ Concept introduced in FY 2021-22 (98Ki). As for the future, HCIL will also focus on increasing the Diversity Ratio,” said the review report.
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