· Key factors to succeed in India. India is a
unique market with strong local players, and perhaps the only large market
where none of the top four players globally have even a 5% share. We believe
MNCs need to do well on the following parameters to succeed in India: (1)
Suitable products (2) Sales & service network (3) India as an export base
(4) Brand strength (5) Ownership costs, and (6) Commitment to India.
· Hyundai, Nissan and Honda, the key threats to
Maruti. In our analysis of all the global automakers, Hyundai, not
surprisingly, fares the best on most parameters. Nissan is the one showing the
highest aggression with plans to enter each segment of the market and a
capacity addition plan which makes it the second largest in terms of capacity in
India. But so far its execution has been patchy. Honda stands out for the
strength of its brand and is now making efforts to launch the right products
for the market, especially in the B segment where it plans to have six
products.
· Maruti – a leader working hard. On almost
every parameter above, Maruti fares on top. To fix the gap in its product
portfolio, it is likely to launch two new SUVs and is also working on a smaller
diesel engine for its A segment cars which shall help it sustain/increase its
market share. The company's cost saving and localisation efforts are already
bearing fruit. A recovery in the market could further boost margins via
operating leverage and discount reduction. We increase our estimates by ~8% as
we build in higher volumes to account for Maruti's entry into SUVs. Our target
price increases to Rs1,960 (from Rs1,760).
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