Maruti Suzuki will gain the most from economic recovery and also regain lost market share, say brokerages

• Maruti Suzuki’s market share dropped below the 50% mark in FY22, as its SUV penetration lingered at 12%.
• Maruti Suzuki is expected to gradually regain their lost market share with its healthy utility vehicle pipeline
• The company’s management also aims to sell up to 3.5 million units in the fiscal year 2023.

The strong economic recovery anticipated this year has brought some good news for automobile company Maruti Suzuki, which has a strong pipeline set for new launches this year.
According to a recent report by HDFC Securities, Maruti Suzuki is expected to gradually regain their lost market share with its healthy utility vehicle (UV) pipeline. The brokerage firm has advised investors to add more stocks of Maruti Suzuki to their portfolio, keeping a target price of ₹8,412.

“A gradual recovery in the economy is expected to restore discretionary consumption for the middle to low income class and Maruti Suzuki is expected to be the key beneficiary,” the report added.
Maruti Suzuki — one of the biggest automobile manufacturers in India that produced Alto, WagonR, Swift and others — had a market share of nearly half to almost 97% in almost all segments of passenger vehicles. However, its limited presence in the sport utility vehicle (SUV) segment — and the growing interest in this segment — ate into its total market share.

The company only has 12% penetration in the SUV segment, which pulled down its total market share to 43% in FY2022. The company’s market share stood at 53.16% in FY2020 and 51% in FY2021, once again representing a drop in annual basis.

Maruti Suzuki now plans to get back to 50% passenger vehicle market share domestically by implying “industry leading volume growth, going forward”, a report by ICICI Securities emphasized.

Maruti Suzuki is chasing SUV

"So, overall our market share in the SUV vertical is just 12 per cent. This is where we are now making efforts to bolster our presence," Shashank Srivastava, senior executive director of marketing and sales at Maruti Suzuki had said.

The company now plans to launch new versions of its SUV Vitara Brezza, the Baleno Cross and Jimny off-roader in an attempt to regain its lost market share. According to media sources, Maruti Suzuki expects that these vehicles can bring in incremental sales of as much as 250,000 units a year and more than double its market share in the SUV segment.

It has already launched mid-cycle upgrades of Ertiga and XL6 in April 2022.

“We believe that concerns over market share loss in UVs are overstated, as MSIL has often proven its mettle in the past, and we expect it to bounce back this time as well,” the report added.
Source: Company, HDFC Securities

The company’s management also aims to sell up to 3.5 million units in FY23, which will roughly translate to a gain of 11-14% market share on an annual basis.

“We expect a recovery of both market share and margin in FY23 and FY24, led by a favourable product lifecycle, operating leverage, and product mix as well as price action/cost-cutting,” a report by Axis Bank added.

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