New launches, easing cost pressure to lead Maruti back on growth track
The company’s market share in the PV segment dropped 430 basis points year-on-year to 44.7% in December 2021 following chip shortage and lack of new launches in the sports utility vehicle (SUV) segment. Before the launch of the new Celerio in November 2021, it had not introduced a new model or upgrade for more than 30 months.
The tide may be turning for the company with a slated launch of nearly half a dozen SUVs in the next three year ranging from sub-four metre to a large 4.4 metre. The product introduction will start from the next fiscal year with the launch of the two SUVs, one would compete with Hyundai Creta while the other, Jimny, would be positioned against Mahindra’s Thar. These models together are expected to add nearly 2.5 lakh vehicles a year to the company’s volume.
The success rate of Maruti’s new launch is significantly higher than its counterparts given its pan-India retail network. In addition, with an ebbing chip shortage, the company plans to increase production to nearly 8,000 vehicles a day in March 2022 from around 6,500 in December 2021. This would help the company to produce around 4,90,000 units in the March 2022 quarter taking the full year tally to around 1.65 million. It would imply 15% growth for FY22.
Vahan, the national vehicles registry, shows that Maruti’s retail market share started improving month-on-month since October 2021. It had a retail market share of 44.4% in December 2021. The demand for passenger vehicles continues to be robust with the order book of car makers reaching nearly half a million; nearly half of this belongs to Maruti. In December 2021, Maruti’s dealer inventory dropped to a record low of less than a week or about 10,000 units.
On the margin side, metal prices appear to be peaking and the cost pressure on the raw material basket for automakers is inching down. This will help in margin improvement. At Monday’s closing price of Rs 7,519.7 on the BSE, the stock was traded at 23 times FY23 estimated earnings, a 16% premium to its long-term average valuation.
We are now on Telegram. Click here to join our channel (@TechiUpdate) and stay updated with the latest Technology headlines.
For all the latest Automobile News Click Here