Maruti’s market share and margin growth expected in FY22

Maruti Suzuki India Ltd, the country’s largest passenger car manufacturer, is expected to show good growth in domestic market share due to several new product launches in FY 2022. Apart from this, the operating profit and margins of the company are also expected to improve in this period due to increase in the price of vehicles and reduction in discounts being given.

Maruti’s volume has witnessed a strong growth in the 2020-2021 financial year due to better-than-expected economic recovery and a growing trend towards personal mobility. However, due to increase in the prices of raw materials like steel, copper and other metals, there was pressure on the company’s margins.

Despite a sharp rise in volumes, Maruti shares have seen weakness during the past 6 months due to declining market share and pressure in margins. Maruti shares have underperformed the Nifty and Nifty Auto in this period.

In an interview with Live Mint, analysts at Motilal Oswal say that Maruti could see a 30 per cent increase in volumes in FY 2022 and margins could also improve.

Experts say that the biggest reason for the decline in Maruti’s market share is the lack of new product launches by the company this year. This shortfall has proved to be huge for the company, especially in the fast-growing support utility vehicle segment.

Explain that the market share of the company was 51.2 per cent in FY 2019, which came down to 48.1 per cent in FY 2021.

Motilal Oswal Institutional Equities says that FY 2022 looks full of potential for Maruti. In the next 2 years, the company is preparing to bring an upgrade of many old models along with new models. In this period there are plans to bring upgraded versions of Alto, Celerio, Brezza, Ciaz, and Baleno. At the same time, there are preparations for new launches of Jimny, Grand Vitara, and a mid-size MUVs in this period. Which is expected to benefit the company further.

On Friday, the company increased the price of its vehicles by an average of 1.6 per cent, citing rising costs. The company had also increased prices in January this year. Apart from this, the management of the company has also indicated that if raw material costs continue to rise, Maruti may increase the prices of its products even further.

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