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Hyundai launches entry level car Eon to take on Maruti’s Alto
Hyundai Motor India (Hyundai) has launched Eon, its smallest car designed especially for
the Indian market, at a price point of `2.69lakhs to `3.71lakhs (ex-showroom Delhi).
Eon is based on Hyundai’s new fluidic technology, powered by a three-cylinder 814cc
petrol engine and is available in six versions. The car has been built at an investment of
`900cr (including vendor investments), and Hyundai is targeting sales volume of 150,000
units a year.
Eon will compete directly with Maruti Suzuki’s (Maruti) most successful and highest selling
car model Alto. During FY2011, Maruti sold 346,840 units of Alto, registering growth of
47.5% yoy. The base version of Eon has been priced at a premium of ~`35,000
compared to the Alto and it also lacks air conditioning system, which is available in Alto.
We believe the launch of Eon will intensify competition in the mini car segment, which
accounts for ~31% of the total passenger car market. We feel the weak demand scenario
due to high interest rates coupled with rising competitive intensity and ongoing labour
problems at Manesar facility is likely to keep Maruti’s market share (domestic passenger
car market share declined by ~500bp yoy to 43%) under pressure in 2HFY2012 as well.
However, we expect Maruti to be the major beneficiary once the demand scenario
improves on likely easing of interest rates from CY2012. We maintain our Accumulate
rating on the stock with a target price of `1,172.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Hyundai launches entry level car Eon to take on Maruti’s Alto
Hyundai Motor India (Hyundai) has launched Eon, its smallest car designed especially for
the Indian market, at a price point of `2.69lakhs to `3.71lakhs (ex-showroom Delhi).
Eon is based on Hyundai’s new fluidic technology, powered by a three-cylinder 814cc
petrol engine and is available in six versions. The car has been built at an investment of
`900cr (including vendor investments), and Hyundai is targeting sales volume of 150,000
units a year.
Eon will compete directly with Maruti Suzuki’s (Maruti) most successful and highest selling
car model Alto. During FY2011, Maruti sold 346,840 units of Alto, registering growth of
47.5% yoy. The base version of Eon has been priced at a premium of ~`35,000
compared to the Alto and it also lacks air conditioning system, which is available in Alto.
We believe the launch of Eon will intensify competition in the mini car segment, which
accounts for ~31% of the total passenger car market. We feel the weak demand scenario
due to high interest rates coupled with rising competitive intensity and ongoing labour
problems at Manesar facility is likely to keep Maruti’s market share (domestic passenger
car market share declined by ~500bp yoy to 43%) under pressure in 2HFY2012 as well.
However, we expect Maruti to be the major beneficiary once the demand scenario
improves on likely easing of interest rates from CY2012. We maintain our Accumulate
rating on the stock with a target price of `1,172.
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