Coming soon: Marutis sub-Rs 10 lakh SUVs to take on EcoSport, Duster –

19 Feb 2015 | Author: | Comments Off on Coming soon: Marutis sub-Rs 10 lakh SUVs to take on EcoSport, Duster –

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Maruti Suzuki will soon launch two sports utility vehicles (SUVs) to plug the only two gaps (the other being a small diesel engine) in its product portfolio, Credit Suisse says. These SUVs will be in the Rs 10 lakh price bracket.

Sale of utility vehicles in India has risen at a time when the domestic car industry is facing a massive slowdown. Sales of utility vehicles have jumped by 7.6 per cent between January and October 2013 primarily because of the success of Renault Duster and, more recently, Ford EcoSport compact utility vehicles. Car sales are down by 7 per cent during the same 10-month period.

Maruti had showcased its mini-SUV XA Alpha at the 2012 Auto Expo and the sub-4 metre utility vehicle is likely to be launched in the Indian market early next year. ( Watch: XA Alpha at the 2012 Auto Expo ).

The compact SUV category has already attracted a lot of attention from car makers. Nissan has launched its Terrano in this category and Honda is reported to be readying a model for this segment too.

But Maruti might emerge a leader with its large sales and service network, brand strength and low ownership costs, the investment bank says.

Credit Suisse believes the launch of the SUVs and a small diesel engine for its A-segment (entry level) cars will help Maruti maintain its dominance. Maruti enjoys 70 per cent market share in the A-segment.

The smaller diesel engine will also be used by Maruti for its foray into the light commercial vehicle (LCV) segment, where the company intends to take on more established players like Tata Motors, Ashok Leyland and MM.

Suzuki#39;s decision to allow Maruti to develop export markets in Africa and Latin America is another factor that will help drive both volumes and help Maruti combat currency volatility better, the investment bank added.

For Credit Suisse, Maruti is the top pick in the auto space. Jatin Chawla, research analyst at the firm, said MM does not have a great product cycle and Tata Motors is no longer an India story.

What about MNC players?

India is perhaps the only large market where none of the top four players globally have even a 5 per cent share. And Toyota, Ford and General Motors are unlikely to test Maruti#39;s dominance in the near future, Credit Suisse said.

Maruti#39;s biggest competitor Hyundai#39;s focus on India seems to have reduced because of the success the company has tasted in developed markets. This is evident from the fact that Hyundai was one of the last players to launch diesel variants on its hatchbacks, Credit Suisse said.

The Renault-Nissan alliance stands out as the strongest emerging threat to Maruti considering the amount of money they have committed to the market, the investment bank said.

The only other player which could test Maruti#39;s dominance is Honda, Credit Suisse says.

They have started correcting one large long-standing gap in the portfolio by developing a diesel engine specifically for the Indian market. And over the next few months, we will see them spread themselves across the entire B-segment with six models – three body types (hatchback, SUV and sedan) on two platforms the investment bank concluded.

Credit Suisse has an outperform rating on Maruti with a target of Rs 1,960, which is around 18 per cent higher from current market price of Rs 1,660.

Story first published on . November 28, 2013 12:21 (IST)

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