Maruti Suzuki - Leader in Passenger Vehicles

[Sajal_Singh]

During the Bajaj Auto conference call, an intriguing discussion emerged around the economics of running CNG-powered vehicles versus electric vehicles (EVs), particularly within the context of their three-wheeler (3W) segment. Model management highlighted a compelling point: the cost per kilometer of operating a CNG vehicle is lower than that of an EV. This assertion, coupled with the ease of access and familiarity associated with refueling CNG vehicles compared to charging EVs, sparked a thought-provoking inquiry: could these factors similarly influence the PV market?

Considering Maruti’s strategic approach, which emphasizes a comprehensive focus on various fuel types rather than solely prioritizing EVs, appears accurate in light of these discussions. By maintaining a diversified portfolio across different fuel technologies.
Thoughts?

[1957]

Mariti 800 coming back with a new Avatar 38 KMPL, 5 seater under Rs 5 lakh. Meant for 1st time buyer as entry car.

Maruti 800 Coming Back With More Style and 38 KMPL Mileage. Better than...

[1957]

Only 1 car in India has ever sold 5 million units, it's not i10, Swift or WagonR

[ranvir]

Maruti Suzuki -

Q4 concall and results highlights -

Revenues - 38471 vs 32214 cr
EBITDA - 5221 vs 3894 cr ( margins @ 14 vs 12 pc )
Other income - 1261 vs 850 cr
PAT - 3952 vs 2688 cr

Sales volumes - 5.84 lakh vs 5.14 lakh cars ( up 13.5 pc ). Export sales @ 78k vs 64k cars

EBITDA margins expansion led by - increased capacity utilisation, lower sales promotion expenses

Full yr sales volumes @ 21.35 vs 19.66 lakh cars ( up 9 pc )

Utility vehicles sales volumes grew by a whopping 75 pc @ 6.42 lakh cars in FY 24

Segments that de-grew include - Mini ( down 39 pc ) and compact ( down 4 pc )

Indian car mkt grew 8 pc YoY to cross 40 lakh car sales. India is now the third largest car market in the world

The shift in consumer preference towards SUVs continued in FY 24

The share of Hatchback segment is down to 27 pc, down from a high of 49 pc in FY 19

Share of CNG vehicles continues to rise. Now at 15 pc of total PV market !!!

EV and Hybrid cars currently at 2 pc mkt share each

Maruti Suzuki’s exports for FY 24 stood at 2.8 lakh cars. Company is also the largest car exporter from India. Exports grew by 10 pc YoY

Grand Vitaraa became the fastest car to clock 1 lakh car sales in the Industry

Company increased its solar power generation capacity from 26 MW to 43 MW in FY 24. Aim to take it to 48 MW in FY 25

Aim to cross 40 lakh cars / yr production target by 2030 ( almost double of current capacity )

CNG car sales for the company were around 4.5 lakh cars in FY24. Next yr, they are targeting a sales of 6 lakh CNG cars. Bulk of CNG sales come from Ertiga

First time buyers in FY 24 @ 43 pc of sales. Rest were replacement and additional car buyers

Committed to the Hybrid technology. Initially focussed on bigger cars like - Grand Vitara, Invicto. If volumes in these categories sustain, will invest in R&D to roll out Hybrid technologies in compact cars as well

Company did face supply challenges in the CNG segment in Q4 ( due some component shortage ) because of which some sales have been deferred. Current bookings / backlog of CNG deliveries stand at over 1 lakh vehicles - mostly Ertiga. Total - company level bookings currently stand at 2 lakh vehicles

Royalty payments to SUZUKI stand @ 3.5 pc of sales

Design to Launch timelines for new vehicles remain at 4 yrs

Disc: hold a small tracking position, biased, not SEBI registered

[Avigyan_Mitra]

Maruti Suzuki Initiates Recall for Alto K10

Maruti Suzuki has announced a recall of 2,555 Alto K10 vehicles due to a potential defect in the steering gear box assembly. The company has taken a precautionary measure to protect consumers by advising owners of affected vehicles to refrain from driving until the part is replaced. Maruti Suzuki will undertake the inspection and replacement of the defective part at no cost to customers.

[Avigyan_Mitra]

Maruti Suzuki Q1 FY25 Analysis: Key takeaways!!

Maruti Suzuki remains optimistic about the long-term growth potential of the Indian automotive market, despite short-term challenges. The company acknowledges that current industry growth expectations are not very high, but believes the fundamentals in India remain intact. Management emphasized that India’s passenger vehicle market, at 4.2 million units annually, is already at a good level globally and has significant room for further growth.

Strategic Initiatives:

1. Capacity Expansion: Commissioned an additional vehicle assembly line at Manesar with 100,000 units annual capacity.
2. Product Portfolio Expansion: Launched the fourth-generation Swift to revitalize the hatchback segment. Plans to increase model lineup from 18 to 28 by the end of the decade.
3. Network Expansion: Achieved milestones of over 3,000 Arena sales outlets and 5,000 service touch points.
4. Sustainable Energy Push: Targeting to scale up captive solar capacity from 43.2 MWp to 78.2 MWp by FY25. Established a small biogas plant at Manesar.
5. Technology Diversification: Continuing focus on CNG vehicles while developing EVs, hybrids, and flex-fuel options.

Trends and Themes:

1. Shift towards SUVs continues, with utility vehicles + vans now comprising 45% of domestic volumes in Q1 FY25, up from 36% in Q1 FY24.
2. Growing adoption of CNG vehicles, now accounting for one in three cars sold by Maruti Suzuki.
3. Increasing focus on renewable energy and sustainable practices across operations.
4. Rural markets performing better than urban areas.

Industry Tailwinds:

1. Long-term growth potential of the Indian automotive market.
2. Increasing acceptance of CNG vehicles, with CNG overtaking diesel sales for the first time.
3. Government push for alternative fuels like ethanol and CNG.
4. Expansion of CNG infrastructure to new geographies.

Industry Headwinds:

1. Muted demand in the short term due to factors like heat waves and elections.
2. Declining trend in the small car segment.
3. High base effect from the previous year impacting growth rates.
4. Potential commodity price volatility.

Analyst Concerns and Management Response:

1. Concern: Sustainability of margins given increased discounts and operating deleverage.
   Response: Management highlighted benefits from favorable commodity prices, forex, and cost reduction efforts offsetting discount impacts.

2. Concern: Declining share of first-time buyers and impact on small car sales.
   Response: Management acknowledged some upward shift in first-time buyer preferences but stated this doesn’t fully explain the decline in small car segment.

3. Concern: Future impact of forex movements, particularly yen appreciation.
   Response: Management expects some moderation in forex benefits going forward

Guidance and Outlook:
The company maintains its export target of 300,000 units for the full year. Management expects the industry performance to be broadly in line with the indication given at the start of the year, which suggested modest growth.

Capital Allocation Strategy:
The company continues to invest in capacity expansion, new product development, and sustainable energy initiatives.

Opportunities & Risks:

Opportunities:

1. Growing demand for SUVs and CNG vehicles.
2. Expansion into EV segment with planned launches.
3. Potential growth in rural markets.

Risks:

1. Continued pressure on small car segment.
2. Commodity price and forex volatility.
3. Regulatory changes impacting vehicle costs and demand.

Regulatory Environment:
The company is preparing for upcoming CAFE 3 norms expected to be implemented from April 2027. Management mentioned ongoing discussions about off-cycle CO2 reducing technologies and volume derogation factors.

Customer Sentiment:
Management noted that while current demand is muted, there are customers in the market who might be waiting for auspicious periods or more attractive times to make purchases. They expect the upcoming festive season and better monsoon to potentially boost demand.

Top 3 Takeaways:

1. Maruti Suzuki delivered strong margin performance despite increased discounts and operating deleverage, benefiting from favorable commodity prices and cost reduction efforts.
2. The company continues to adapt to the shift towards SUVs while maintaining a technology-agnostic approach, with plans for EVs, hybrids, and flex-fuel vehicles alongside its strong CNG portfolio.
3. While short-term demand remains muted, management remains confident in the long-term growth potential of the Indian automotive market and is positioning the company accordingly through capacity expansion and product diversification.