Maruti Suzuki at cusp of market share recovery after 2 years of market share loss

After two consecutive years of market share loss, Maruti Suzuki is at the cusp of market share recovery led by new launches, JM Financial Institutional Securities said in a research.

Recently introduced Jimny, Fronx, and Invicto have received good customer response. The pending order book for Brezza, GV, Jimny, Fronx, Invicto, and Eritga stands at 48k/27k/23k/22k/8k/93k units, respectively.

Backed by recent SUV launches, the company has regained leadership position in the SUV segment during Q1FY24, the report said. The pending order book as of Jun'23 stands at 355k units (vs. 412k units at the end of 4Q) led by higher demand for recent launches and CNG models (27 per cent penetration for MSIL).

Q1FY24 witnessed lost sales of 28k units owing to a shortage of electronic components. The company indicated that chip supplies have improved significantly and it remains hopeful of normalised supplies going ahead. Dealer inventory stands at a normal level of four weeks (125k units), the report said.

Maruti Suzuki gained UV market share by 3.3 ppt QoQ to 23 per cent. Overall, the company remains upbeat on sales momentum going ahead led by healthy demand for new/recent SUV launches. Demand for entry segment continues to remain muted.

Overall, the PV industry is expected to grow between 5-7 per cent in FY24 and MSIL is expected to grow ahead of the industry, the report said. With the introduction of Jimny, Fronx, and Invicto, MSIL intends to further strengthen its presence in the B-segment (regained leadership position in SUVs in 1QFY24).

The benefit of richer portfolio mix, softening commodity costs and higher operating leverage is expected to aid margins going ahead, it said.

Stable growth in domestic PVs and a favorable product lifecycle augur well for MSIL. We expect market share gains and margin recovery in FY24, led by an improvement in supplies, a favorable product lifecycle, mix and operating leverage, Motilal Oswal Financial Services said in a report

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