I would not agree with the psyche of masses. I would say even if we don’t want to do something but a law is made and implemented firmly I would say one has to comply, no other choice. Case in point, Aadhar, if it was not linked with everything, many would not have applied for it. I would agree with the infrastructure of EVs though.
I am not bullish on EVs but I wouldn’t think of it as a distant future either, as a change is hard to predict sometimes, there are many moving parts with new ones emerging without a notice, a change may happen sooner than later.
It seems only 50% of the electric cars will be manufactured by Maruti and the rest by Suzuki by 2030. Also all the batteries will be made by Suzuki only. This will leave Maruti with only around 40% of the pie.
They always say that first. EV’s will take over the world sooner than anyone is prepared.I feel ICE cars would simply stop selling totally after 2030 as whatever demand would be there would be met by used cars. Pure ICE auto companies would go bankrupt by that time and early movers would have transformed fully to electric and it would not be economically viable for them to make limited quantity of ICE. More over why would someone still buy ICE in 2030 when they would be cheaper to buy, maintain and even sell. Someone buying ICE in 2030 would find no buyers to resell in 2035-2040. In my opinion inflection point would be somewhere around 2023-2026.
Quality of vehicles itself. Maruti is stuck with same level whereas Tata and Mahindra have improved a lot. Service person was cribbing about new Swift which was made 100 kg lighter by compromising quality.
Also, earlier we used to hate Tata service center for taxis and same is with Maruti now.
I see that people have been using terms like EV and block chain without context. One must sit down and see the reality before predicting events. Even an EV is not made of just 20 parts. It has complex circuits and multiple non moving parts. It needs service if components fail. It needs good marketing to sell. Range extender may be needed for initial 10 or 15 years before we can increase range and provide charging support. If we consider the example of hard disk vs SSD, it is clear that it may take a long time to remove the former. It took less time to replace tape drives when hard disk came to the market. So not all disruptions can be quick. Let’s see the reality by watching events very closely.
The growth last year was exceptional. So we should see some sluggishness. Add BS6 to the mix and we actually want production to be less than demand.
PV has grown at less than 5% cagr in the last decade. Maruti grew faster due to market share growth. So it makes sense to grow volume at 5% cagr while bottom line and revenue to grow at around 10% cagr due to market shift from A segment to B and C1 segments.
From my personal experience, when OEMs like Maruti come under margin pressure, bigger impact gets passed on to their component suppliers(cost reduction pressures, longer payment cycles, more inventory holding expectations etc) So I would be wary of investing in any auto component supplier in current scenario (except maybe Bosch who has pricing power due to technology)
Even after reading a zillion books on long term investing and value investing, people still worry about short term market cycles. Auto sales are seasonal and sometimes can have abnormal growth - degrowth. One may have to look at a 10 year picture to see where we are going. 50% of cars are bought by 1st time buyers. It would be foolish to worry about short term trends and compare with mature fragmented markets in the west.
Roadmap of Suzuki and Toyota partndrship is out.
From India perspdctive Suzuki will supply Ciaz and Ertiga to Toyota.Toyota will supply Hybrid Electric Vechicle technology.Suzuki is giving away top selling Baleno, Ciaz,Vittera for Africa market.Africa business is already challenging fof Suzuki India due to forex availibility. Pease share your thought looks like give some-take some policy drafted well, keeping in mind electric mobility is the future. Find the pdf submitted to exchage on 20th Mar 2019. 91351210-dc44-455f-aaa1-7b7a29622f8f (1).pdf (139.1 KB)
I have a strong feeling that Toyota will eventually buy Suzuki and Maruti will be the ‘budget Toyota’ one can buy. The fear of EV can now be put to rest. The platforms for Hybrid/EV is already available and hence has an advantage over competition. The market share is going to increase after 2020 and I would expect it to go higher if EV and hybrid catches up on entry level cars.
sometimes these articles look vague…why would Maruti loose market share when the price diff b/w petrol and diesel cars(even small ones) will be more than 2 lacs? also, the chairman is still looking at continuing producing diesel cars for top variants like vitara brezza,ertiga,ciaz etc. vitara brezza is only diesel currently…why would Maruti stop selling this top revenue generating model.
Moreover this seems incorrect news.They just launched DDIS 225 BS6 compliant diesel engine that will be used in their cars. Hormaz sorabjee from autocar has confirmed that they are ready for BS6 when it comes in 2020
The only risk to Maruti is how Suzuki plays its game .
Some adverse moves could be …
If Suzuki says Maruti will focus on small , less premium cars and Toyota/ Suzuki models will play premium car game … then Maruti will lose out in long term .
If Suzuki / Toyota own electric technology and licences the same to Maruti at good margin - Maruti will lose out again
Ownership of backend operation with high assured margin : Today with Maruti size it can bargain hard with supplier and get very favourable cost structure . But if parent supplies car to Maruti it will lose on that advantages
