Super Good news for Maruti Suzuki shareholders.
It appears that what you and julian have pointed out, will be the major negatives to look out for in maruti. Their current state is quiet amazing with new cars bagging market leading positions.
Maruti Suzuki Sales in December 2018 - https://www.bseindia.com/xml-data/corpfiling/AttachLive/b0a51e3c-5d4f-44e4-8781-759b8a223f9a.pdf
Maruti Suzuki is on track to come out with at least 10-12 new models in the next 18-24 months, including upgrades and facelifts, said several people aware of the matter. Under normal circumstances, the company would have taken almost twice the time to roll out so many models.
Maruti Suzuki is expecting a growth rate of 6-8% in 2019 with volumes of 1.9 to 2 million units before the market absorbs the price increase in 2020, said the second person. The carmaker ended calender year 2018 with a market share of over 50% for the first time in over a decade despite slowing growth in the past six months
Maruti Suzuki facing wipe out. By 2025 every car sold in the world will be an electric vehicle which will have only 20 moving parts against 2000 moving parts of a Maruti vehicle. Massive disruption coming! It’s already here. Watch video below on the expected collapse of the automobile industry!
Thanks for the interesting share. But phrases like “maruti wipe out” “automobile industry collapse” are over the top and irresponsible. You seem to have this aggression while posting here
Agree with disruption coming but key question is how much time and who is going to disrupt, Will Maruti just sit back and won’t make EV themselves.
Here we need to understand only one thing on disruption. Which components industry will be whipped out and which new component industry will be emerged. Some components like Tyres, Steering wheel, Mirror, Wiper, Seats are going to stay whether its IC or EV type vehicle. Obviously re-sale / secondary car market is going to see a challenge for IC type vehicles once EV start pick up. Ride share / rental business model is picking up heavily in Tier-1 cities. What i see is second car concept is slowly vanishing in most of the homes after Ola / Uber rolling in peoples daily life. See the market leader adoption country like Norway, how it is transforming to completely EV vehicle in short duration of time…Which proves, EV adoption in India is going to be by 2021-23 and maruti is going to be the leader. Since it has a bigger moat factors - Large distribution base, Caters product for all type of customers, 50% share of current market and see the strategy of Wagon-R as an entry criteria for EV vehicle.
Moreover what i foresee is replaceable electric batteries (runs for 300-400 KM) will be adopted similar to the current fueling time of 5-10 minutes which can save price / time with premium rechargeable battery cost.
People erroneously think that the electric car is a normal car with a battery instead of IC engine. An electric car is an entire new product with only 20 moving parts against 2000 for a normal car. The disruption will be enormous. It is funny to hear that Maruti will be the market leader for electric cars in India, when they are as yet unheard of in the electric car market of the world. An electric car battery costs 40% of the cost of the car, and since Suzuki is planning to manufacture the batteries and selling it to Maruti, we all know who is going to take all the profits home.
Lesson: Auto & auto ancillary stocks are better left to the experts.
What is your take on the battery makers Amara Raja and Exide? What kind of growth or future do you think they would have?
Exide seems to be ahead in the race. Only time will tell, whether Exide or somebody else wins.
Amara Raja Batteries eyes India’s electric vehicle market, set to grow to $300 billion by 2030 – https://www.financialexpress.com/industry/amara-raja-batteries-eyes-indias-electric-vehicle-market-set-to-grow-to-300-billion-by-2030/1304187/
You mean the current royalty system will continue. Nothing will change? That’s not a bad thing then.
When the product itself is gone, what is the need for royalty?
Maruti is a market leader for a reason. They have a management which is probably among the top #5 in the country at this point. A market leader has a lot of ways to maintain its pole position, in terms of acquisition of technology, acquisition of smaller players, mindspace that has grown over generations (especially important in a closely knit tightly networked community like India that lacks trust). Maruti is quietly doing research on EVs and is making it sound like EVs aren’t going to disrupt because they still have ICE PVs to sell. Its in their best interest to downplay but that doesn’t mean they are asleep at the wheel.
There are enough examples of behemoths that have ignored newer disruptions like Kodak and Nokia and dug their holes but there are also enough examples of FMCG players and tech companies surviving via acquisitions of brands and/or technologies. The phenomenon of big becoming bigger (and staying bigger) is relatively new that we suspect longevity of big businesses based on how it has played out in the past few centuries. I think disruptions are taken more seriously without complacency in the last 10 years than they have ever been. It is important to note that Maruti’s technology comes from parent Suzuki and their engines sold in India are actually Fiat’s but that hasn’t stopped them from cornering such a large market share even with their extremely mediocre vehicles. (Fiat’s market share is laughable)
It has always been a puzzle for me how Maruti has managed what it has done and I don’t think that’s changing quickly anytime soon. I personally wouldn’t write a management like this off that quickly with hyperbole.
Disc: Never had Maruti in the portfolio and still don’t but suspect this could be a good long term bet in the near future.
The biggest advantage of maruti is its huge distribution network and service centres. The scale cannot be replicated in few years especially in a diversified country like India. Therefore IMO maruti has advantage of being the first choice for collaboration with suitable foreign partners because of their superior reach and understanding of local market better than any other else.
Maruti has maintained its leadership primarily beacuse of 2 reasons :
- Strong dealership, ASC’s network
- Cheaper spare parts
- correctly understanding the “kitna deti hey” pulse of the masses
These reasons are also why i have been a investor here.
It is easy to go along with the hype, but ground realities in India are quite different.
Neither do we have the infrastructure to support electric cars nor do we have the masses with the psyche of saving the environment.
and to believe that things are going to change in next 6 years is too far fetched.