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● Hyundai today marked its foray into the entry car segment with the
launch of eagerly anticipated ‘Eon’. The car would be sold in six
variants with the base version at an attractive price of Rs270,000.
● Eon would directly take on Maruti’s best-selling model Alto. While
priced at a slight premium to Alto, it has a host of better features
including better space—both interior and boot space—along with
higher mileage.
● Maruti has always been the strongest in the entry segment with an
80% market share with Alto forming ~30% of its total volumes. It
lost only ~200 bp of market share in FY11 despite a huge number
of launches. We believe that even if Eon manages to garner a
20% market share in the entry segment, its launch could alone
potentially result in a ~500 bp market share loss for Maruti.
● While the Eon has to sell only ~95,000 units to take a 20% market
share in the segment, Hyundai is targeting 150,000 units p.a. from
this product. Even if it cannibalises the Santro a little bit, we
reckon there is a downside risk to our current assumption of
Maruti selling ~360,000 Altos in this financial year.
Hyundai today launched its new model Eon. Though priced at a slight
premium to Alto, the car compares favourably on various features.
Figure 1: Eon would pose serious competition to Alto
Alto Eon
Wheelbase (mm) 2360 2380
Engine displacement (cc) 796 814
Power (bhp) 47/6200 56/550
Torque (Nm/rpm) 62/3000 76.5/4000
Ground clearance (mm) 160 170
Mileage (kml) 19.73 21.1
Boot space (litres) 190 215
Source: Company data, Credit Suisse estimates.
Potential market share loss for Maruti
Till now Maruti has had complete domination in the entry segment
with a market share of at least ~80% compared with ~35-50% in other
segments. While Tata Nano promised much, it failed to provide much
of a threat. Now for the first time Maruti would face credible
competition in this segment and Alto’s volumes, which form 30% of
Maruti’s sales, could come under serious pressure. Since the entry
segment forms 25% of market, even if there is 20% impact in the
market share, it would result in it losing market share by ~500 bp.
Apart from being a very stylish car, the Eon has much better interior
and a larger boot space compared to the Alto. Even on mileage and
engine power, it scores over the Alto. On models with similar features,
it is priced at a ~Rs35,000 premium. It also has higher variants which
offer features like central locking, built-in audio systems and airbags
for the first time in an entry level car
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
● Hyundai today marked its foray into the entry car segment with the
launch of eagerly anticipated ‘Eon’. The car would be sold in six
variants with the base version at an attractive price of Rs270,000.
● Eon would directly take on Maruti’s best-selling model Alto. While
priced at a slight premium to Alto, it has a host of better features
including better space—both interior and boot space—along with
higher mileage.
● Maruti has always been the strongest in the entry segment with an
80% market share with Alto forming ~30% of its total volumes. It
lost only ~200 bp of market share in FY11 despite a huge number
of launches. We believe that even if Eon manages to garner a
20% market share in the entry segment, its launch could alone
potentially result in a ~500 bp market share loss for Maruti.
● While the Eon has to sell only ~95,000 units to take a 20% market
share in the segment, Hyundai is targeting 150,000 units p.a. from
this product. Even if it cannibalises the Santro a little bit, we
reckon there is a downside risk to our current assumption of
Maruti selling ~360,000 Altos in this financial year.
Hyundai today launched its new model Eon. Though priced at a slight
premium to Alto, the car compares favourably on various features.
Figure 1: Eon would pose serious competition to Alto
Alto Eon
Wheelbase (mm) 2360 2380
Engine displacement (cc) 796 814
Power (bhp) 47/6200 56/550
Torque (Nm/rpm) 62/3000 76.5/4000
Ground clearance (mm) 160 170
Mileage (kml) 19.73 21.1
Boot space (litres) 190 215
Source: Company data, Credit Suisse estimates.
Potential market share loss for Maruti
Till now Maruti has had complete domination in the entry segment
with a market share of at least ~80% compared with ~35-50% in other
segments. While Tata Nano promised much, it failed to provide much
of a threat. Now for the first time Maruti would face credible
competition in this segment and Alto’s volumes, which form 30% of
Maruti’s sales, could come under serious pressure. Since the entry
segment forms 25% of market, even if there is 20% impact in the
market share, it would result in it losing market share by ~500 bp.
Apart from being a very stylish car, the Eon has much better interior
and a larger boot space compared to the Alto. Even on mileage and
engine power, it scores over the Alto. On models with similar features,
it is priced at a ~Rs35,000 premium. It also has higher variants which
offer features like central locking, built-in audio systems and airbags
for the first time in an entry level car
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