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Automobiles
India
Auto Expo 2012. Auto Expo 2012 was centered on SUV and two-wheeler launches
while there were no major small car launches this year. Manufacturers launched close
to a dozen new models in the SUV/MPV and two-wheeler segments while there were
only two launches in the small car segment. We expect competitive intensity to escalate
in the two-wheeler segment which is likely to result in increase in ad spends, in our
view. Mini SUV segment is likely to attract buyers from the entry-level sedan segment.
Two-wheelers and SUVs were the centre of attraction
Two-wheeler manufacturers unveiled 12 new major models at the expo of which six were in the
scooter segment. Four new 110cc bikes will be launched this year which clearly indicates
manufactures are targeting the Splendor and Activa models.
Hero displayed three new models – Passion X Pro (110cc bike), Maestro scooter and Ignitor (125cc
bike) while Honda also displayed its new 110cc bike (Dream Yuga), new Dio scooter and CBR
150cc. Suzuki and Yamaha also launched new scooters and entry-segment bikes. Among the
premium models, Piaggio will launch its premium scooter range of Vespa to define a new segment
in the scooter space.
Manufacturers are also planning to target the sub-compact SUV segment in CY2012E. Among the
notable launches in this segment this year would be – Ford EcoSport, Renault Duster, Maruti’s
Ertiga and new Safari Storm. Maruti, Ford and Renault are targeting to price their vehicles between
Rs600,000 and Rs900,000 and plan to target urban families with a family size of five people. We
expect some customers from the entry-level sedan segment to be keen to move into the subcompact
SUV segment given the larger space and power of these vehicles versus a sedan.
There were only two major small car launches this year – Renault Pulse and Chevrolet Sail. While
Renault Pulse is positioned as a premium hatchback and will be launched in June 2012, Chevrolet
Sail will be launched by end of CY2012.
Competition likely to intensify in the two-wheeler segment, in our view
We believe competitive intensity is likely to intensify in the two-wheeler segment in both the entrylevel
motorcycle and scooter segments. We expect advertisement spends to increase as
manufacturers try to differentiate their products from each other.
We believe operating margins could come under pressure in the two-wheeler segment as –
(1) we expect the lower-end motorcycle segment share in the domestic motorcycle segment to
increase from the premium segment in FY2013E, (2) we reckon advertisement spends will increase
due to increase in number of new model launches and (3) we expect domestic industry volume
growth to slow down to 10-12% yoy in FY2013E due to a slowdown in the rural segment.
We prefer Bajaj Auto over Hero Motocorp in the two-wheeler segment due to higher growth in
exports and stability in operating margins (due to higher profitability of exports and premium
product portfolio).
Auto Expo 2012
We attended the Auto Expo 2012 which was held in New Delhi. Key attraction of the show
this year was the numerous launches in SUVs/MPV and two-wheeler space. Unlike the last
auto expo, manufacturers did not launch new small cars due to aggressive competition in
that space and focused on the small SUV segment which will emerge as a new category, in
our view.
No major small car launches this year
There were no major small car launches this year except for Renault Pulse and Chevrolet
SAIL. Renault Pulse is likely to be positioned as a premium hatchback (Rs600,000-700,000)
and is a replica of the Nissan Micra. General Motors will also launch Chevrolet SAIL by the
end of CY2012 but pricing is still unknown. Bajaj Auto also displayed its RE-60 which will be
launched to target the taxi segment. We believe the space in the RE-60 is quite less as
compared to Magic Iris of Tata Motors and RE-60 is likely to be priced at 10-15% premium
to existing three-wheelers. Bajaj Auto will first launch RE-60 in Sri Lanka and then launch it
in India by mid-CY2012.
SUVs/MPVs were the centre of attraction this year
Manufacturers are planning to target the sub-compact SUV segment in CY2012. Among the
notable launches in this segment this year would be – Ford EcoSport, Renault Duster,
Maruti’s Ertiga and new Safari Storm. Maruti, Ford and Renault are targeting to price their
vehicles between Rs600,000 and Rs900,000 and plan to target urban families with a family
size of five people. We expect some customers from the entry-level sedan segment to be
keen to move into the sub-compact SUV segment given the larger space and power of these
vehicles versus a sedan. Maruti also displayed its concept XA Alpha SUV which is likely to be
launched after two years.
Mahindra displayed the Ssangyong model range at the expo and we were impressed by the
Korando E concept. Mahindra did not display its mini Xylo at the expo which is also likely to
be launched in CY2012. Toyota and General Motors launched the refreshed versions of
Innova, Fortuner and Captiva. Ashok Leyland also made an entry in the MPV space with Stile
which will be targeted against the Innova for the taxi-segment customer.
Major launches in the two-wheeler segment: Competitive intensity set to increase
Two-wheeler manufacturers unveiled 12 new major models at the expo of which six were in
the scooter segment. Four new 100cc bikes will also be launched this year which clearly
indicates manufactures are targeting the Splendor and Activa models. Hero displayed three
new models – Passion X Pro (110cc bike), Maestro scooter and Ignitor (125cc bike) while
Honda also displayed its new 110cc bike (Dream Yuga), new Dio scooter and CBR 150cc.
Suzuki and Yamaha also launched new scooters and entry-segment bikes. Among the
premium models, Piaggio will launch its premium scooter range of Vespa to define a new
segment in the scooter space.
Honda’s much awaited 110cc bike Dream Yuga looked similar to Hero’s Splendor and we
would await clarity on the pricing and fuel efficiency of this bike to emerge. Mahindra also
plans to re-launch its Stallio motorcycle to re-enter the motorcycle segment. Bajaj Auto did
not display its motorcycle range at the expo and is planning to launch the new Pulsar in Feb
2012.
Tata Motors also launched a new LCV range and displayed Prima trucks
Tata Motors also launched its new LCV range called Ultra with payload capacity in the 5 to
14 ton range. Tata Motors also launched additional features in the Ace range. We were
impressed with the new LCV range which would replace the old Tata 402 LCVs in its
product portfolio.
Key takeaways from the expo were as follows:
�� Mini SUV compact segment is likely to get crowded and these SUVs could take some
market share from the entry-level sedan segment. Most notable competitor in this space
would be Ford EcoSport, however Ford will need to launch diesel engine in this model to
be competitive.
�� Two-wheeler segment is likely to face a lot of competition, especially in the 110cc
motorcycle segment and 110cc scooter segment. We believe scooter segment is likely to
outpace the motorcycle segment this year as well.
�� Honda’s new 110cc motorcycle could pose competition for Discover and Splendor if the
pricing is competitive from Honda, in our view.
�� We believe advertisement spends are likely to increase in CY2012E, especially in the twowheeler
segment as manufacturers differentiate their similar-looking products.
�� Manufacturers have also targeted the Innova with a variety of launches. Maruti’s Ertiga
could pose competition for the Innova and Xylo if priced lower than the Innova and Xylo,
in our view.
�� We do not expect incremental competitive intensity to increase in the small car segment
and if the industry volumes improve, we believe operating margins are also likely to
improve. Increase in diesel engine capacity will be the key for industry volume growth in
FY2013E, in our view.
�� We expect Maruti Suzuki to increase its market share in the passenger car segment in
FY2013E driven by the mini Dzire launch, increase in diesel engine capacity and popularity
of Maruti Swift.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Automobiles
India
Auto Expo 2012. Auto Expo 2012 was centered on SUV and two-wheeler launches
while there were no major small car launches this year. Manufacturers launched close
to a dozen new models in the SUV/MPV and two-wheeler segments while there were
only two launches in the small car segment. We expect competitive intensity to escalate
in the two-wheeler segment which is likely to result in increase in ad spends, in our
view. Mini SUV segment is likely to attract buyers from the entry-level sedan segment.
Two-wheelers and SUVs were the centre of attraction
Two-wheeler manufacturers unveiled 12 new major models at the expo of which six were in the
scooter segment. Four new 110cc bikes will be launched this year which clearly indicates
manufactures are targeting the Splendor and Activa models.
Hero displayed three new models – Passion X Pro (110cc bike), Maestro scooter and Ignitor (125cc
bike) while Honda also displayed its new 110cc bike (Dream Yuga), new Dio scooter and CBR
150cc. Suzuki and Yamaha also launched new scooters and entry-segment bikes. Among the
premium models, Piaggio will launch its premium scooter range of Vespa to define a new segment
in the scooter space.
Manufacturers are also planning to target the sub-compact SUV segment in CY2012E. Among the
notable launches in this segment this year would be – Ford EcoSport, Renault Duster, Maruti’s
Ertiga and new Safari Storm. Maruti, Ford and Renault are targeting to price their vehicles between
Rs600,000 and Rs900,000 and plan to target urban families with a family size of five people. We
expect some customers from the entry-level sedan segment to be keen to move into the subcompact
SUV segment given the larger space and power of these vehicles versus a sedan.
There were only two major small car launches this year – Renault Pulse and Chevrolet Sail. While
Renault Pulse is positioned as a premium hatchback and will be launched in June 2012, Chevrolet
Sail will be launched by end of CY2012.
Competition likely to intensify in the two-wheeler segment, in our view
We believe competitive intensity is likely to intensify in the two-wheeler segment in both the entrylevel
motorcycle and scooter segments. We expect advertisement spends to increase as
manufacturers try to differentiate their products from each other.
We believe operating margins could come under pressure in the two-wheeler segment as –
(1) we expect the lower-end motorcycle segment share in the domestic motorcycle segment to
increase from the premium segment in FY2013E, (2) we reckon advertisement spends will increase
due to increase in number of new model launches and (3) we expect domestic industry volume
growth to slow down to 10-12% yoy in FY2013E due to a slowdown in the rural segment.
We prefer Bajaj Auto over Hero Motocorp in the two-wheeler segment due to higher growth in
exports and stability in operating margins (due to higher profitability of exports and premium
product portfolio).
Auto Expo 2012
We attended the Auto Expo 2012 which was held in New Delhi. Key attraction of the show
this year was the numerous launches in SUVs/MPV and two-wheeler space. Unlike the last
auto expo, manufacturers did not launch new small cars due to aggressive competition in
that space and focused on the small SUV segment which will emerge as a new category, in
our view.
No major small car launches this year
There were no major small car launches this year except for Renault Pulse and Chevrolet
SAIL. Renault Pulse is likely to be positioned as a premium hatchback (Rs600,000-700,000)
and is a replica of the Nissan Micra. General Motors will also launch Chevrolet SAIL by the
end of CY2012 but pricing is still unknown. Bajaj Auto also displayed its RE-60 which will be
launched to target the taxi segment. We believe the space in the RE-60 is quite less as
compared to Magic Iris of Tata Motors and RE-60 is likely to be priced at 10-15% premium
to existing three-wheelers. Bajaj Auto will first launch RE-60 in Sri Lanka and then launch it
in India by mid-CY2012.
SUVs/MPVs were the centre of attraction this year
Manufacturers are planning to target the sub-compact SUV segment in CY2012. Among the
notable launches in this segment this year would be – Ford EcoSport, Renault Duster,
Maruti’s Ertiga and new Safari Storm. Maruti, Ford and Renault are targeting to price their
vehicles between Rs600,000 and Rs900,000 and plan to target urban families with a family
size of five people. We expect some customers from the entry-level sedan segment to be
keen to move into the sub-compact SUV segment given the larger space and power of these
vehicles versus a sedan. Maruti also displayed its concept XA Alpha SUV which is likely to be
launched after two years.
Mahindra displayed the Ssangyong model range at the expo and we were impressed by the
Korando E concept. Mahindra did not display its mini Xylo at the expo which is also likely to
be launched in CY2012. Toyota and General Motors launched the refreshed versions of
Innova, Fortuner and Captiva. Ashok Leyland also made an entry in the MPV space with Stile
which will be targeted against the Innova for the taxi-segment customer.
Major launches in the two-wheeler segment: Competitive intensity set to increase
Two-wheeler manufacturers unveiled 12 new major models at the expo of which six were in
the scooter segment. Four new 100cc bikes will also be launched this year which clearly
indicates manufactures are targeting the Splendor and Activa models. Hero displayed three
new models – Passion X Pro (110cc bike), Maestro scooter and Ignitor (125cc bike) while
Honda also displayed its new 110cc bike (Dream Yuga), new Dio scooter and CBR 150cc.
Suzuki and Yamaha also launched new scooters and entry-segment bikes. Among the
premium models, Piaggio will launch its premium scooter range of Vespa to define a new
segment in the scooter space.
Honda’s much awaited 110cc bike Dream Yuga looked similar to Hero’s Splendor and we
would await clarity on the pricing and fuel efficiency of this bike to emerge. Mahindra also
plans to re-launch its Stallio motorcycle to re-enter the motorcycle segment. Bajaj Auto did
not display its motorcycle range at the expo and is planning to launch the new Pulsar in Feb
2012.
Tata Motors also launched a new LCV range and displayed Prima trucks
Tata Motors also launched its new LCV range called Ultra with payload capacity in the 5 to
14 ton range. Tata Motors also launched additional features in the Ace range. We were
impressed with the new LCV range which would replace the old Tata 402 LCVs in its
product portfolio.
Key takeaways from the expo were as follows:
�� Mini SUV compact segment is likely to get crowded and these SUVs could take some
market share from the entry-level sedan segment. Most notable competitor in this space
would be Ford EcoSport, however Ford will need to launch diesel engine in this model to
be competitive.
�� Two-wheeler segment is likely to face a lot of competition, especially in the 110cc
motorcycle segment and 110cc scooter segment. We believe scooter segment is likely to
outpace the motorcycle segment this year as well.
�� Honda’s new 110cc motorcycle could pose competition for Discover and Splendor if the
pricing is competitive from Honda, in our view.
�� We believe advertisement spends are likely to increase in CY2012E, especially in the twowheeler
segment as manufacturers differentiate their similar-looking products.
�� Manufacturers have also targeted the Innova with a variety of launches. Maruti’s Ertiga
could pose competition for the Innova and Xylo if priced lower than the Innova and Xylo,
in our view.
�� We do not expect incremental competitive intensity to increase in the small car segment
and if the industry volumes improve, we believe operating margins are also likely to
improve. Increase in diesel engine capacity will be the key for industry volume growth in
FY2013E, in our view.
�� We expect Maruti Suzuki to increase its market share in the passenger car segment in
FY2013E driven by the mini Dzire launch, increase in diesel engine capacity and popularity
of Maruti Swift.
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