Passenger cars: Bright outlook - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Passenger cars: Bright outlook

May 15, 2002

While most of the segments in the auto sector have been affected as a result of slowdown in the economy, the Indian passenger car and two-wheeler categories have been buzzing with activity in the last two years. The success of Hyundai, a smart comeback by Tata Engineering (Telco) and a rejuvenated Fiat have been fired the consumer's imagination. We take a look at the performance of the passenger car segment during the fiscal and the future growth prospects. Passenger car volumes increased by 5% in FY02 to 608,130 units. While the market leader, Maruti Suzuki, witnessed a marginal drop in unit sales during the year, Hyundai has continues to consolidate its market share in the car segment. After the scorching success of 'Santro' and 'Accent', the company lauched its premium car 'Sonata'. The improved versions of Santro, Accent along with the encouraging response for Sonata have ensured a marginal rise in its market share in the current year. The year was also marked by the smart comeback of Telco's 'Indica V2'. Telco posted a 47% rise to 65,331 unit sales in FY02. Consequently, its market share has touched 11% as compared to 8% in FY01. Though the improved version of 'Indica' has come a long way since its launch, its early days yet to comment on its reliability in the long run.

Maruti leads the lotů
(Nos) FY01 Market share (%) FY02 Market share(%) Change (%)*
Maruti 344,463 58.6% 342,927 56.4% -0.4%
Telco 44,552 7.6% 65,331 10.7% 46.6%
Hyundai 86,719 14.8% 90,677 14.9% 4.6%
Passenger Cars 587,669 100.0% 608,130 100.0% 3.5%
*FY02 over FY01

It has been a rough ride for Maruti in the last three years. After the entry of multinationals, the company's market share and profitablity have seen severe pressure. Labour unrest and a relatively aged product portfolio have been the key causes for concern. But in FY02, Maruti introduced a number of models like 'Versa', improved version of 'Esteem' and 'Alto'. Most of the newly introduced models have not performed upto expectations and the company was forced to resort into re-launching some of them (the latest being 'Alto Spin'). But if one were to look at the passenger car industry, the number of new model launches in the premium end have clearly outpaced the rest. Mercedes, Ford, Hyundai, Fiat, Opel, Honda and Mitsubishi have been successful in their respective segments by smartly upgrading the erstwhile 'Maruti Esteem' customers.

Coming to the future outlook of the industry, with India coming under WTO norms, most of the multinationals are keenly evaluating the possibility of new model launches through semi-knocked down (SKD) forms. With customs duty as high as 180% for imports, launching new models through this form seems to be a viable proposition. Again, most of the proposed new model launches are targeted at Segment B and above customers (i.e. the Esteem range) with Toyota being the only one that seems to be interested in the small car category. We expect the industry to grow by 5%-6% in line with the GDP growth in the coming year.

Maruti might still sustain as one of the most formidable players in the future, especially post the change in management control. Given its strong distribution network and after sales service centres spread across India, it is well placed from a long-term perspective. Both Suzuki and General Motors could bring in their expertise to the management, which seems to be struggling to cope with competition.


Equitymaster requests your view! Post a comment on "Passenger cars: Bright outlook". Click here!

  

More Views on News

TATA MOTORS Announces Quarterly Results (2QFY20); Net Profit Up 117.4% (Quarterly Result Update)

Oct 29, 2019 | Updated on Oct 29, 2019

For the quarter ended September 2019, TATA MOTORS has posted a net profit of Rs 2 bn (up 117.4% YoY). Sales on the other hand came in at Rs 654 bn (down 9.3% YoY). Read on for a complete analysis of TATA MOTORS's quarterly results.

TATA MOTORS Announces Quarterly Results (1QFY20); Net Profit Down 58.4% (Quarterly Result Update)

Jul 29, 2019 | Updated on Jul 29, 2019

For the quarter ended June 2019, TATA MOTORS has posted a net profit of Rs 34 bn (down 58.4% YoY). Sales on the other hand came in at Rs 615 bn (down 8.4% YoY). Read on for a complete analysis of TATA MOTORS's quarterly results.

TATA MOTORS 2018-19 Annual Report Analysis (Annual Result Update)

Jul 5, 2019 | Updated on Jul 5, 2019

Here's an analysis of the annual report of TATA MOTORS for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of TATA MOTORS. Also includes updates on the valuation of TATA MOTORS.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

I Recommended this Stock over Page Industries because it's Relevant to Doubling Your Income (Profit Hunter)

Sep 7, 2020

Things are not often what they seem in the market and how you can take advantage of this.

The NASDAQ Whale Could Harm Your Portfolio (Fast Profits Daily)

Sep 7, 2020

The discovery of Softbank pushing up prices on the NASDAQ will cause volatility in the market. Stay alert!

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

TATA MOTORS SHARE PRICE


Sep 18, 2020 (Close)

TRACK TATA MOTORS

  • Track your investment in TATA MOTORS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

TATA MOTORS - FORD COMPARISON

COMPARE TATA MOTORS WITH

MARKET STATS