Menu

Automobile Industry

  • Home>
  • Automobile Industry
MRF Q1 FY26: Revenue Up, Profits Down on Margin Pressures
Automobile News, Autos, Equities, Markets - February 21, 2025

Auto industry anticipates boost in demand by wedding season and recovery of infra projects

Indian automobile industry anticipates boost in demand by wedding season and recovery of infra projects

 

The Indian automobile industry is looking forward to the upcoming marriage season and also recovery of public infrastructure projects. The auto industry believes that it will lead to growth in sales of the vehicles, particularly affordable cars and two-wheelers. 

 

Challenges faced by Automobile industry

Following the festive season, the automakers in India faced issues in sales growth. It is also due to gradual removal of discounts. In recent times, the automakers are paying attention to two crucial factors which are overall demand trends and surge in price levels in the market. It will aid them in anticipating the future outlook of the auto industry and company as well. 

 

Higher rural demand

In terms of rural and urban demand, the demand for vehicles by rural region was higher in the range of 200 to 300 bps compared to the urban growth in the third quarter of FY25. This demand trend in rural areas highlights that people living in rural regions are showcasing higher interest in buying vehicles against the people living in urban regions. Despite strong growth from rural areas, the auto industry required a stronger boost in order to have complete revival of demand in the industry.

 

Factors contributing to revival of demand

As per the past trends, the auto industry recorded higher demand for vehicles in the wedding or festive season.  As the wedding season is coming up, many automakers anticipate that it will lead to higher demand for autos in the market as many purchase vehicles for personal use or as gifts. 

 

Apart from wedding and festive season, government incentives and infrastructure projects play a crucial role in strengthening the auto demand in the industry. In recent times, the auto industry believes that recovery in the infrastructure project by the government of India would lead to a boost to the auto sector. These plans will lead to faster infrastructure growth, expansion in income generation, mainly in rural regions. This will ultimately lead to strengthening of sales in the auto industry.

 

Additionally, other factors like interest rates and income tax cuts can also help in boosting demand for vehicles in the market. In case of contraction in interest rates, it will encourage people to take more loans for purposes like auto purchases as they have to repay less amount of loan. 

 

In the Budget 2025, the government of India announced income tax cuts up to Rs.12.75 lakhs of income. It led to expansion in disposable income of the people. It resulted in marginally easier for consumers to purchase new vehicles. 

 

International demand trend

In the third quarter of the financial year 2025, many automakers recorded robust strength demand in the international market which was higher than earlier estimates. In contrast to this, automobile component players recorded slowdown in demand trends in this third quarter. This current trend is anticipated to remain in the future quarters as well. 

 

In present times, the automobile industry in India is in a situation of uncertainty. The driving factors like contraction in interest rates, wedding season, and higher rural demand can lead to a boost to the revival of demand and sales in the auto industry in the upcoming terms.

 

 

 

The image added is for representation purposes only

Adoption of high speed rails can aid in growth of India’s EV adoption rate like China

 

 

 

 

, , 0 Comment
Read More
Maruti Suzuki sets the target of regaining 50 percent auto market share in India
Automobile News, Autos, Business, Equities, Markets - February 21, 2025

Maruti Suzuki sets the target of regaining 50 percent auto market share in India

Maruti Suzuki sets the target of regaining 50 percent auto market share in India

 

Maruti Suzuki is considered as the largest automaker in India. It aims to regain 50 percent of its market share in the Indian passenger vehicle segment by the year 2030. 

 

Market share of the company

In the financial year 2019, the company had a market share of 50 percent in the Indian auto market. In the last few years, it faced strong competition from its peers like Kia, Tata, and Hyundai. In recent times, the company recorded a market share of about 41.6 percent in India.

 

Performance of the company in 3QFY25

The company was successful in achieving its revenue and profit targets due to better sales portfolio, quality, and better condition of exchange rates. However, the company recorded a contraction in achieving its volume sales growth. It was driven by contraction in its market share in the Indian auto market and also strong competition in the EV sector. 

 

Roadmap of Maruti Suzuki

The company’s mid-term management plan is to accelerate the production capacity to around 4 million units per annum which will be twice its current production capacity.  It targets to become the top auto manufacturer in the domestic market, export segment, and also in the Electric Vehicle (EV) segment in the upcoming five years. To put this plan in implementation, the company is developing two production facilities in Gujarat and Kharkhoda. 

Maruti Suzuki highlights that India is a crucial market for automakers. It will continue to progress in the future as well. It will act as an engine for the progress of Suzuki in the future. In recent times, the auto industry is recording a highly competitive environment and also rising demand of consumers for high quality of equipment, services, and product functions in their vehicles. 

SMC, a parent company of Maruti Suzuki main focus is to expand product portfolio and develop its capabilities in order to meet the preference of the Indian auto market. The company plans to expand and improve its product portfolio in terms of medium and large Sport utility vehicles (SUVs) and Multi-purpose vehicles (MPVs). It also focuses on quick development and launching of affordable vehicle segments in the market which will satisfy the consumer preferences.

The company plans to launch vehicles in various segments like battery electric vehicles, hybrid electric vehicles, CNG vehicles, and fossil fuel vehicles. It will be designed and manufactured as per the geographic conditions and consumer preference in various regions of India.

 

Launch of e Vitara

In the month of January 2025, the company launched its first BEV e Vitara at the Bharat Mobility Global Expo 2025. It is set to be sold in both domestic and international markets.  Further, the company plans to launch about 4 BEV auto models by the financial year 2030. Its peer companies like Tata Motors already have a strong market and portfolio in terms of EV models. This entry of Suzuki in EV is considered to be a late entry. Despite this, it is important to understand that India’s EV market is still in the growing phase compared to other nations in the world. The company aspires to achieve a strong position in the EV market with the advantage of a large consumer base and extensive network of touchpoints.

 

The company will join hands with FinDreams, which is a subsidiary company of China’s BYD for the purpose of purchasing batteries for its EV model vehicles. In the upcoming years, it plans to localize the production which will align with the progress in the EV market. 

 

It also has plans to upscale the Nexa into a premium brand and Arena addressing a broader customer base. This will help in achieving the company’s goal to adhere to better customer experience. 

 

Collaboration with Toyota

Maruti Suzuki’s strategic collaboration with Toyota continues to remain strong by working as equal partners and competitors. Both the companies plan to create a carbon-neutral space with cooperation and aims to progress in the future. The company has the goal of achieving carbon emission reduction of around 42 percent by the financial year 2030.

 

Future Outlook

The company aims to achieve market share of 50 percent in the Indian market by the year 2030. Additionally, it targets operating profit margin of higher than or equal to 10 percent and return on equity of higher than or equal to 15 percent in the initial half period of the 2030s.

 

The image added is for representation purposes only

Larsen & Toubro recorded strong revenue and PAT growth with highest quarterly orderbook in 3QFY25

 

 

 

 

, , 0 Comment
Read More
Maruti Suzuki sets the target of regaining 50 percent auto market share in India
Autos, Equities, Markets, Research, Result Updates - January 30, 2025

Maruti Suzuki Q3FY25: Strong Revenue Growth and Record Exports, But Margin Pressure Remains

Maruti Suzuki Q3FY25: Strong Revenue Growth and Record Exports, But Margin Pressure Remains

Company Name: Maruti Suzuki India Ltd | NSE Code: MARUTI | BSE Code: 532500 | 52 Week high/low: 13,680 / 10,204 | CMP: INR 12,000 | Mcap: INR 3,77,433 Cr | P/E- 25

About the stock
➡️Maruti Suzuki India Ltd. is the largest passenger vehicle manufacturer in India, holding a dominant market share of over 40%. The company, a subsidiary of Suzuki Motor Corporation (Japan), offers a diverse portfolio ranging from entry-level hatchbacks to premium SUVs.

➡️It has a strong distribution network with over 4,000 touchpoints across the country. Maruti is also expanding into green mobility, with a growing focus on EVs, hybrids, and CNG models. The company has a significant export presence, catering to markets in Africa, Latin America, and the Middle East.

Strong Revenue Growth Led by Record Exports
➡️Maruti Suzuki delivered an in-line performance for Q3FY25, reporting net sales of ₹35,535 crore, up 15.7% YoY, driven by higher volumes (+13% YoY) and better realisation (+2.4% YoY). The company achieved its highest-ever exports in a quarter, with volumes rising 38% YoY, primarily supported by strong demand in Africa, Latin America, and the Middle East.

➡️Domestic sales increased by 9% YoY, aided by festive demand and growing preference for premium models. Despite these positives, realisation declined sequentially, reflecting a higher mix of entry-level models and discounting measures.

EBITDA Margin Under Pressure Due to Higher Costs
➡️Despite strong revenue growth, EBITDA declined to ₹3,890 crore, with the EBITDA margin contracting by 15 bps YoY to 11.3%, impacted by higher raw material and staff costs. However, raw material costs eased sequentially by 33 bps, offering some margin support.

➡️The average discount per car increased to ₹30,999, compared to ₹29,300 in the previous quarter, highlighting the need for promotional efforts to sustain sales momentum in the entry-level segment.

Demand Outlook: Strength in Premium Segment, Weakness in Entry-Level Cars
➡️The demand outlook remains favorable, particularly in rural markets where demand growth is outpacing urban regions. However, the entry-level segment continues to face softness, which may limit domestic volume expansion and necessitate higher sales promotions and discounts. The premium segment, particularly utility vehicles (UVs) and mid-size models, saw strong traction, contributing 20% and 17.6% to total domestic sales, respectively. This aligns with broader industry trends, where SUVs and high-end vehicles are gaining share.

Expanding EV & Green Vehicle Portfolio
➡️Maruti Suzuki has officially entered the EV market with the launch of E-Vitara, which will be manufactured exclusively by the company and exported to over 100 countries. Alongside its EV push, the company remains bullish on CNG vehicles, which now contribute one out of every three vehicles sold, reflecting a clear shift towards green mobility solutions.

Valuation and key metrics
➡️Maruti Suzuki is currently trading at 25x FY26 earnings, which is at a premium to Hyundai (22.2x) but justified by its market leadership, strong export growth, and expanding premium portfolio. The company’s return profile remains healthy, with a Return on Equity (ROE) of 13.8% and a Return on Capital Employed (ROCE) of 17.2% for the trailing twelve months (TTM). Additionally, its interest coverage ratio stands at 87.5x, indicating a strong balance sheet with minimal leverage concerns.

The image added is for representation purposes only

Renewable Energy Sector Awaits Budget 2025 for Key Support Measures

, , 0 Comment
Read More
Solid reason for GST reduction on two-wheelers
Business, Equities, Market News, Markets - January 10, 2025

Two-Wheelers, Tractors to Outpace Cars, Trucks by FY27

Two-Wheelers, Tractors to Outpace Cars, Trucks by FY27

The report of Jefferies, an investment banking and financial services company stated that the volume of two-wheelers (2Ws) and tractors will increase by 13 to 15 percent of the compounded annual growth rate (CAGR). It will surpass passenger vehicles and trucks in the financial year 2025-27.

CAGR Projection
According to the report, the two-wheeler’s CAGR is expected to increase strongly by 13 percent and the CAGR for tractors is expected to grow by 15 percent during the financial year 2025-27. While, the two-wheelers and tractors’ CAGR is estimated to grow by 12 percent and 6 percent in the financial year 2025.

The report also states the volume growth for passenger vehicles and trucks segment is estimated to increase at a rate ranging from 5 percent to 8 percent. It is comparatively lower than the growth rate of two-wheelers and tractors.

Further, the report states that the CAGR of passenger vehicles and trucks is estimated to grow at 8 percent and 5 percent over the financial year 2025-27. While, the CAGR estimations for the financial year 2025 for passenger vehicles and trucks is positive growth by 2 percent and negative growth of 4 percent, respectively.

Growth Rebound
The growth prospects for two-wheelers between the financial year 2021 and 2023 were not good due to weakened demand. Its demand was lower than the passenger vehicle’s demand. The reasons for the slow demand were disruptions caused due pandemic and also increase in regulatory costs. It resulted in making two-wheelers less affordable for lower-income class people. The regulatory costs such as the On-Board Diagnostics (OBD) led to an increase in production costs, increase in commodity and input prices and also third-party insurance premiums hike for two-wheelers with engines bigger than 150cc. The Covid-19 pandemic was a period of financial difficulties for many people. This made it difficult, especially for people of lower income groups to purchase and maintain two-wheelers along with the issue of new regulations.

In the financial year 2024, the volume of two-wheelers in wholesales strongly bounced back. It increased by 14 percent year-on-year (YoY) growth, which exceeded the 8 percent of passenger vehicles growth.

Despite the two-wheelers’ recovery in the financial year 2024, it remained 13 percent lower than its peak growth in the financial year 2019. On the other hand, passenger vehicles were able to surpass its growth of the pre-pandemic level. Its volume surged by 25 percent above its pre-pandemic levels.

The tractor segment in the Indian automobile industry is showing signs of cyclical recovery. Indicating another good thing for the automobile industry in India. For the financial year 2025-27, the growth for the two-wheelers and tractor segments is estimated to be 12 percent and 15 percent, respectively.

In contrast to these growth prospects, the passenger vehicles and trucks segments is expected to grow at a moderate CAGR of 8 percent and 5 percent, respectively, during the same period.

Company-wise growth
The markets of traditional lead companies such as Maruti Suzuki and Hyundai observed a fall in the PV segment of around 12-year lows in the first half of the financial year 2025. In the midst of this shift in position in the automobile industry, Mahindra & Mahindra (M&M) is leveraging its position and is anticipated to surpass Hyundai as the second-largest original equipment manufacturer (OEM) in Passenger Vehicles by the financial year 2027.

Market shares of Electric Vehicles
According to the report, the market share of electric vehicles in two-wheeler sales has become sluggish in the range of 4 percent to 7 percent for the previous two years. Despite this, the period observed launch activity of lower-priced vehicles by the original equipment manufacturers (OEMs). The reasons for this weak demand was the growing concerns regarding the reliability, longevity and the resale value of the vehicles.

In contrast to this, the sales of electric vehicles in the two-wheelers segment is estimated to rise by 10 percent over the financial year 2027. The companies such as Bajaj Auto and TVSL are considered the leader in this segment.

On the other hand, the electric vehicle adoption in the passenger vehicles segment is considered to remain weaker at 2 percent growth rate. In this, Tata Motor is considered as the leading company in the midst of the rising competition.

The image added is for representation purposes only

2025: A Year of Consolidation and Policy-Driven Growth

, , , 0 Comment
Read More
Navratri Demand + GST 2.0: How India’s Auto Sector Hit New Heights
Business, Equities, Market News, Markets - December 11, 2024

November 2024 Auto Sales: A Market in Flux

November 2024 Auto Sales: A Market in Flux

The Indian automobile industry in November 2024 presented a vivid contrast, with the passenger vehicle (PV) segment grappling with challenges while the two-wheeler (2W) market enjoyed a resurgence. Data from the Federation of Automobile Dealers Associations (FADA) highlighted a 14% decline in car sales juxtaposed with a 16% growth in two-wheeler sales, reflecting a tale of two distinct consumer behaviors.

Passenger Vehicles: A Slowdown Post Festive Highs
Passenger vehicle sales slumped in November, marking a sharp decline from the record-breaking October sales fueled by festive demand during Dussehra and Diwali. The steep fall points to an exhausted pent-up demand, signaling market normalization after the seasonal high.

Segmental Challenges:
While SUVs and utility vehicles (UVs) performed well during October’s festivities, sedans and hatchbacks saw waning interest. The UV segment has increasingly captured market share, accounting for nearly half of the total PV sales, as highlighted by robust October growth rates of 13.9% year-on-year (YoY). However, this shift may have temporarily disrupted supply chains, contributing to November’s downturn.

Rising Costs and Interest Rates:
Higher vehicle prices, coupled with elevated interest rates on auto loans, deterred prospective buyers. Rising input costs, particularly for essential components like steel and semiconductors, have driven automakers to hike prices, impacting affordability for middle-income consumers.

Inventory Challenges:
Dealers struggled with high inventory levels post-festivals, especially in Tier-II and Tier-III markets. The Society of Indian Automobile Manufacturers (SIAM) noted that the increase in wholesale dispatches ahead of festivals did not translate into sustained retail demand, leading to overstocking.

Two-Wheelers: Resilience Amid Adversity
In contrast to passenger vehicles, two-wheelers emerged as a growth story in November, continuing their festive-season momentum. The 16% YoY growth reflects strong rural demand, affordability, and evolving urban mobility needs.

Rural Demand Drives Growth:
The revival of rural demand, aided by improved agricultural incomes and targeted financing options, played a significant role in boosting sales. Hero MotoCorp and TVS Motors capitalized on this trend, registering robust sales growth during the month.

Shift to Electric Vehicles (EVs):
Electric two-wheelers continued gaining traction, reflecting changing consumer preferences for sustainable and cost-efficient options. Companies such as TVS Motors reported a 45% YoY surge in EV sales during October, and the trend likely continued into November.

Affordability and Accessibility:
Two-wheelers remain the preferred choice for middle-income households due to their affordability. Rising fuel prices have also nudged consumers toward scooters and motorcycles, which are economical and convenient for daily commutes.

Broader Market Implications
Export Markets Thrive:
Both PV and 2W manufacturers reported significant growth in export markets. Royal Enfield witnessed a 150% jump in exports, leveraging its strong brand presence in South Asia and Latin America. Similarly, Bajaj Auto and Hero MotoCorp achieved double-digit export growth, diversifying revenue streams amid domestic challenges.

Urban vs. Rural Divide:
The urban-rural split continues to shape the auto market. While urban centers saw a slowdown in PV demand due to economic uncertainties, rural regions fueled two-wheeler growth, aided by better monsoon outcomes and favorable MSP (Minimum Support Price) policies for crops.

EVs Gain Momentum:
Across segments, the focus on electric mobility intensified. Automakers expanded EV portfolios to cater to rising demand, driven by government incentives, lower running costs, and growing environmental awareness among consumers.

Policy Recommendations
Credit Support:
Policymakers should enhance credit access for consumers, particularly in rural areas, to sustain two-wheeler demand. Interest rate subsidies or targeted financing schemes could address affordability challenges in the PV segment.

EV Incentives:
The government should continue supporting EV adoption through subsidies and infrastructure development, such as expanding charging networks. Addressing bottlenecks in EV component supply chains could further accelerate growth.

Rural Development:
Strengthening rural infrastructure and enhancing income opportunities will indirectly boost auto demand. Policies targeting improved road connectivity and last-mile mobility solutions can create new opportunities for automakers.

Conclusion
November 2024’s auto sales highlight the complexities of India’s automobile market. While passenger vehicles face short-term challenges, the two-wheeler segment’s robust performance reflects resilience and adaptability. For stakeholders across the value chain, understanding these dynamics and aligning strategies accordingly will be critical. Investors, in particular, should focus on long-term themes such as electrification and rural penetration to navigate the sector’s evolving landscape.

The Indian auto industry stands at a crossroads, with opportunities in sustainable mobility and export growth offering a pathway to future resilience. By leveraging these trends, the sector can weather current headwinds and emerge stronger in the years to come.

The image added is for representation purposes only

TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

, , , 0 Comment
Read More