Auto sector shifts gears to premium models as high segment 2Ws, PVs take over - Business Guardian
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Auto sector shifts gears to premium models as high segment 2Ws, PVs take over

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The Indian automobile sector is riding high on premiumization as trends show in two-wheelers and passenger vehicles. A study of model-wise data for two-wheelers (2Ws) and PVs for FY24 (year-to-date) shows that the growth in domestic motorcycles has been driven largely by the 125cc and above segments with the 125 cc segment up 15 per cent yoy, 150-250cc segment up 22 per cent YoY and the 250cc plus segment up 19 per cent YoY. On the other hand, the 100cc segment continues to underperform the industry and is up about 9 per cent.

For Maruti Suzu – ki, the Fronx and Grand Vitara models continue to drive UV growth, while for Mahindra and Mahindra’s (MM) biggest growth driver in UVs in FY24 has been Scorpio and for Hyundai, the launch of Exter has helped boost volumes in the compact SUV segment without materially cannibalising Venue sales, a report by Motilal Oswal Financial Service showed on Tuesday.

In motorcycles, the 100 cc segment’s contribution has now fallen to 48.6 per cent from 56.9 per cent in FY20. As a result, Hero MotoCorp (HMCL) has lost its market share in domestic motorcycles by 300 bp to 43 per cent for FY24. In the 125cc segment, TVS Motor (TVSL) has been the biggest outperformer, with its market share rising by a whopping 680 bp to 15.1 per cent. In the 150-250 cc segment, Bajaj Auto (BJAUT) has been the biggest gainer, with a 390bp jump in market share to 34.6 per cent, In the 250 cc plus segment, Royal Enfield (RE) has lost 400bp share to new launches from Harley Davidson (through HMCL) and Triumph (through BJAUT). In PVs, Maruti Suzuki India (MSIL) has done well to sustain its share at 42 per cent , despite the fact that the car segment, which contributes to 57 per cent of its mix, has declined by 12 per cent yoy. One of the key growth drivers for MSIL has been Fronx, which is now averaging 11000 units per month since its launch in April 2023 and has been improving (Jan-Feb sales at 14000 units per month.

Grand Vitara has also scaled up well for MSIL and has averaged 10,000 units per month in YTD. Mahindra’s biggest growth driver has been Scorpio, which is now averaging 11.4k units per month for YTD and 14.5k per month for the last two months vs. 6.4k units per month last year. The XUV400 has now picked up to about 1,500 units per month for the last two months. For Hyundai, the launch of Exter has helped ramp up its volumes in the compact SUV segment. Before its launch, Venue was averaging about 11k units in this category.

After the launch, Hyundai is now selling 19k units per month in this segment, with 8k units of Exter alone without any material cannibalization to Venue so far. Even HMSI’s Elevate is so far selling an average of 4.5k units per month for the last six months since launch. Toyota which has gradually addressed its supply issues, has now been able to ramp up its Innova sales to 8.5k units per month since May’23, split largely equally between Innova Crysta and Hycross.

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Hyundai Motor & Kia Forge Strategic P’ship with Exide Energy for EV Battery Production in India

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Exide Industries surged 13% to hit a record high of INR 363.35 after South Korean auto giants. Hyundai Motor Company and Kia Corporation announced a partnership with Exide Energy Solutions Ltd, a subsidiary of Exide Industries for electric vehicle battery localisation in India.

Hyundai Motor Company (Hyundai Motor) and Kia Corporation (Kia) have inked a Memorandum of Understanding (MoU) with Exide Energy Solutions Ltd (Exide Energy), a prominent Indian battery firm, as a strategic collaboration in line with their electric vehicle (EV) expansion strategies. The signing event occurred at Hyundai Motor Group’s Namyang Research and Development Center in South Korea.

With the expansion of their EV plans for the Indian market, Hyundai Motor and Kia aim to localize their EV battery production, specifically focusing on lithium-iron-phosphate (LFP) cells.

As per a release, this strategic move will position them as the pioneers in applying domestically produced batteries in their upcoming EV models in the Indian market.

“India is a key market for vehicle electrification due in part to the government’s carbon neutrality goals, which makes securing cost competitiveness through localized battery production crucial,” said Heui Won Yang, President and Head of Hyundai Motor and Kia’s R&D Division. “Through this global partnership with Exide Energy Solutions Ltd., we will gain a competitive advantage by equipping Hyundai Motor and Kia’s future EV models in the Indian market with locally produced batteries.”

Kolkata-based Exide Industries Ltd, a leading lead-acid battery supplier in India, has over 75 years of experience and market leadership in lead-acid batteries.

Exide Energy Solutions Ltd is a wholly owned subsidiary company of Exide Industries Ltd, which was established in 2022 to foray into the business of manufacturing Lithium-Ion cells, modules, and packs incorporating a portfolio of multiple chemistries and form factors.

This strategic cooperation with Exide Energy marks the beginning of Hyundai Motor and Kia’s efforts to expand its exclusive battery development, production, supply, and partnerships in the Indian market. India is recognized as a highly promising automotive market worldwide, and the country is rapidly emerging as a critical player in the production and sales of EVs.

Realizing the strategic importance of the Indian market, Hyundai Motor and Kia are taking the lead in the Indian market by introducing their EV models to establish themselves as the frontrunners in the Indian automotive industry.

As per data released by the auto dealers association on Monday, for the entire 2023-24, retail auto sales in India achieved a notable 10 percent year-on-year growth, with the 2W, 3W, passenger vehicle, tractor, and commercial vehicle segments registering growth rates of 9 percent, 49 percent, 8.45 percent, 8 percent, and 5 percent respectively, setting record highs in the 3W, passenger vehicle, and tractor categories.

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Modest growth of 3.14 % in retail sales, PVs dip 6 %, 2W & 3Wsoar: FADA

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In FY24, auto retail sales saw sector-wide growth, leading to a 10 per cent yoy growth, with the 2W segment registering growth rate of 9 per cent, 3W segment growing by 49 per cent, PVs by 8.45 per cent, tractors by 8 per cent and commercial vehicles by 5 per cent respectively.

Despite election uncertainties, economic concerns and intense competition, the two wheeler and 3W segments showcased positive sentiment in March retail sales, especially in the premium and EV segments even as the Indian auto retail sector posted a modest growth of 3.14 per cent yoy in March 2024, with passenger vehicles sales showing a decline of 6 per cent, tractors showing a decline of 3 per cent and commercial vehicles facing a slump of 6 per cent respectively. However, in FY24, auto retail sales saw sector-wide growth, leading to a 10 per cent yoy growth, with the 2W segment registering growth rate of 9 per cent, 3W segment growing by 49 per cent, PVs by 8.45 per cent, tractors by 8 per cent and commercial vehicles by 5 per cent respectively, the Federation of Automobile Dealers Associations (FADA) said on Monday.

Heading into FY’25, FADA projects growth amidst a mix of optimism and challenges. The vehicle retail data of FADA for March’24 and FY’24 shows a surge in electric vehicle sales amidst expiration of the FAME 2 subsidy on 31 March with the 2W electric vehicles share jumping to 9.12 per cent for the first time. There was positive sentiment in 3W segment which demonstrated growth driven by the increasing acceptance of EVs, showing an optimistic trend despite potential challenges from election uncertainties and policy changes. Manish Raj Singhania, notes that the 2W segment demonstrated resilience and adaptability, with EV sales surging due to the expiration of the FAME 2 subsidy on March 31st. “This led to a notable boost in the 2W-EV market share to 9.12 per cent. “Positive market sentiment was supported by seasonal events, improved vehicle supply, and financial incentives. Despite facing market volatility and intense competition, the industry is strategically evolving, particularly in the premium and EV categories, signalling a bright future.” said Singhania.

In FY24, auto retail sales saw sector-wide growth, leading to a 10 per cent yoy growth, with the 2W segment registering growth rate of 9 per cent, 3W segment growing by 49 per cent, PVs by 8.45 per cent, tractors by 8 per cent and commercial vehicles by 5 per cent respectively. The 2W segment benefited by enhanced model availability, the introduction of new products and a positive market sentiment, alongside the burgeoning EV market and strategic premium segment launches. The growth in the 3W segment was driven by the introduction of cost-effective CNG fuel options, new EV models, expanding city landscapes, demand in last mile mobility in urban centres resulting in strong demand, marking a new industry benchmark. The PV segment’s growth was propelled by improved vehicle availability, a compelling model mix and significant contributions from the SUV segment, which now claims 50 per cent market share.

The auto is projecting an optimistic outlook in FY’25, focusing on new product launches, especially in EVs and leveraging economic growth, favourable government policies and expectation of good monsoon to fuel demand, despite facing challenges like competition and the need for strategic market engagement. The 3W segment showed an encouraging sales trend hitting an all-time high retail, driven by the growing acceptance of EVs. The introduction of EV autos and loaders positively impacted the retail environment. Although faced with election-related uncertainties and concerns over policy changes, such as free bus travel for women, the overall outlook for the sector remains upbeat, supported by the quality of vehicles and strong market demand.

The PV sector encountered challenges, with a m-o-m decrease of 2 per cent and a yoy fall of 6 per cent The downturn was influenced by heavy discounting and selective financing further affected by economic worries and the electoral climate. Nonetheless, positives such as improved vehicle availability, increased stock levels and new model launches did stimulate demand in certain areas. The impact of election activities and changes in festival dates also played a role in sales dynamics. The near-term outlook of FADA notes concern over decline in consumer sentiment among urban Indians and warns that the automotive sector faces a nuanced challenge. Given the continued inflationary trend without any relief in finance rates, these prospective buyers may continue to hesitate. Heading into FY’25, the auto industry is poised for growth amidst a mix of optimism and challenges.

The excitement around new product launches, particularly electric vehicles, sets a forward-looking tone. Manufacturers are gearing up with better supply chains and an array of models to meet diverse consumer demands. Economic growth, favourable government policies and an anticipated good monsoon are expected to fuel demand, especially in rural areas and the commercial vehicle sector, which is closely linked to infrastructure projects and economic activity.

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Maruti Suzuki dominates India, produces over 3 crore cars in record time

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Suzuki Motor Corporation announced on Wednesday that its subsidiary, Maruti Suzuki India, has achieved a significant milestone by crossing the cumulative production mark of 3 crore units in India. This achievement positions India as the second country, after Japan, where Suzuki has accomplished this feat. Notably, India reached this milestone even faster than Japan, accomplishing it in just 40 years and 4 months since commencing production in December 1983. The production journey in India commenced with the iconic Maruti 800 under the joint venture between Suzuki and the Government of India.

Presently, Maruti Suzuki India Ltd operates manufacturing facilities in Gurugram, Manesar (Haryana), and Hansalpur (Gujarat), contributing to the production and rollout of vehicles. The company highlighted that over 2.68 crore vehicles have been manufactured at its Haryana-based facilities, while over 32 lakh vehicles were produced at Suzuki Motor Gujarat, a wholly-owned subsidiary of MSIL. The Maruti 800, renowned for revolutionizing personal mobility in the country, emerged as a significant contributor to this milestone, with over 29 lakh units produced. Other top-performing models include Alto 800, Alto K10, Swift, Wagon R, Dzire, Omni, Baleno, Eeco, Brezza, and Ertiga.

The company reiterated its commitment to the ‘Make in India’ initiative emphasizing its role in strengthening operations to cater to both domestic and global markets. Currently, Maruti Suzuki India contributes nearly 40% to the total vehicle exports from India. MSIL’s Managing Director & CEO, Hisashi Takeuchi, expressed the company’s dedication to meet customer demand and aspirations amidst India’s emergence as the world’s third-largest passenger vehicle market.

Takeuchi outlined plans to invest further and increase annual production capacity to 4 million units by FY 2030-31. To achieve this target, the company plans to establish two new greenfield manufacturing plants, each with a capacity of 10 lakh units, in Kharkhoda, Haryana, and Gujarat. Additionally, the company aims to expand its model range from the current 18 to 28 by FY 2030-31.

In January, Maruti Suzuki India announced an investment of Rs 35,000 crore to establish its second plant in Gujarat, reinforcing its commitment to expanding manufacturing capabilities. Earlier in 2022, the company had disclosed plans to invest Rs 18,000 crore in a new manufacturing unit at Kharkhoda. These investments underscore the company’s long-term vision and commitment to further enhancing its manufacturing capabilities in India.

Maruti Suzuki India’s investment plans align with its strategic vision to bolster its manufacturing footprint and meet the evolving demands of the automotive market. By expanding production capacities and diversifying its product range, the company aims to maintain its leadership position in the Indian automotive industry.

The significant milestone of crossing 3 crore units in cumulative production underscores the success of Maruti Suzuki India’s longstanding presence and deep-rooted commitment to the Indian market. It reflects the company’s resilience, innovation, and unwavering dedication to providing high-quality vehicles to customers across the nation.

As Maruti Suzuki India continues to forge ahead on its growth trajectory, the achievement of this milestone serves as a testament to its enduring legacy and paves the way for future milestones in the journey towards automotive excellence. With its robust manufacturing capabilities, innovative offerings, and customer-centric approach, Maruti Suzuki India remains poised to shape the future of mobility in India and beyond.

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TVS Motors posts highest ever sales in FY24 at 41.9 lakh units in March

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Chennai based TVS Motor Company registered a 12 per cent yoy growth in wholesales in March 2024, increasing from 317,152 units in March 2023 to 354,592 units last month. During the fourth quarter of the financial year 2023-24, two-wheeler of the company registered a growth of 23 per cent with sales increasing from 8.40 lakh units in the fourth quarter of financial year 2022-23 to 10.32 lakh units while during the financial year 2023- 24, the company registered a growth of 14 per cent with total sales increasing from 36.82 lakh units in FY 2022- 23 to 41.91 lakh units.

In March 2024, total two-wheelers registered a growth of 12 per cent with sales increasing from 307,559 units in the month of March 2023 to 344,446 units in March 2024. Domestic two-wheeler registered growth of 8% with sales increasing from 240,780 units in March 2023 to 260,532 units in March 2024. The motorcycle segment registered a growth of 22 per cent with sales increasing from 141,250 units in March 2023 to 171,611 units in March 2024 and scooter a growth of 2 per cent with sales increasing from 128,817 units in March 2023 to 131,472 units in March 2024.

The company achieved the highest Vahan retails in March 2024. Electric vehicle dispatches are moderated for smooth transition into the new EV incentive scheme from the Government. The EV recorded sales of 15,250 units in March 2024 as against sales of 15,364 units in March 2023. Three-wheeler sales of the company registered a growth of 6 per cent with sales increasing from 9,593 units in March 2023 to 10,146 units in March 2024. On the international business front, the company’s total exports registered a growth of 23 per cent with sales increasing from 75,037 units in March 2023 to 91,972 units in March 2024.

Two-wheeler exports registered a growth of 26 per cent with sales increasing from 66,779 units in March 2023 to 83,914 units in March 2024. During the fourth quarter of the financial year 2023-24, three-wheeler of the company registered a growth of 4 per cent with sales increasing from 0.29 lakh units in the fourth quarter of financial year 2022-23 to 0.30 lakh units in the fourth quarter of the financial year 2023-24.

Total exports registered a growth of 40 per cent with sales increasing from 1.85 lakh units in the last quarter of FY 2022-23 to 2.50 lakh units in the current quarter. In FY24, two-wheeler sales of the company registered a growth of 15% with sales increasing from 35.12 Lakh units in FY 2022-23 to 40.45 Lakh units in FY 2023-24. Three-wheeler of the company registered 1.46 lakh units in FY 2023-24 as against 1.69 Lakh units in FY 2022-23. Total exports registered 10.13 lakh units sales in FY 2023-24 as against 10.68 lakh units in FY 2022-23.

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Renault-Nissan Alliance to launch 4 new SUVs in India by 2025

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A year after Nissan Motor Corporation and Renault SA announced their Rs 5,300 cr investment plans in India.

One year following the announcement of their Rs 5,300 crore investment plans in India, Nissan Motor Corporation and Renault SA have unveiled their forthcoming portfolio expansion, introducing four new sport utility vehicles (SUVs) slated for release starting in 2025. Nissan, a prominent Japanese automaker, conveyed to the media on Wednesday its intention to sustain investments in the electric vehicle (EV) company Ampere, while Renault has opted against pursuing plans to list Ampere. Makoto Uchida, president and chief executive officer, said on Wednesday that both companies will unveil a five-seater and a seven-seater SUV each. All these models will be manufactured in India.

It was in February 2023 that the companies revamped their global alliance and lined up plans to invest Rs 5,300 crore in India to launch six models, including two EVs. The companies had announced a new long-term plan for India that will increase production, scale up research and development, and shift to carbon-neutral manufacturing. The Renault-Nissan alliance will use its base in Chennai to make six vehicles for domestic and international customers. Renault Nissan Automotive India reportedly produces 2.7 million cars per year.

The Chennai plant produces around 480 cars per day. Uchida, along with Renault Group Chief Executive Officer Luca de Meo, said that India will continue to play a crucial role in the alliance and the partners have invested $1.8 billion in the country so far. He said that “India is at the heart of the alliance”, and Tamil Nadu is chosen for its dynamism and the potential it offers. Through these SUVs, the companies will be competing against the likes of Kia Seltos, Maruti Grand Vitara, Hyundai Creta, Toyota Urban Cruiser Hyryder, Škoda Kushaq, Honda Elevate, and Volkswagen Taigun.

The new models will signal a significant increase in exports from India, boosting Chennai’s plant utilization to 80 per cent from 49 per cent. According to a global road map, Nissan is planning to launch 30 new models over the next three years, of which 16 will be EVs and 14 will be internal combustion engine (ICE) vehicles. Renault reached a peak by producing 1 million vehicles in India last year and has set a target of 2 million by 2030, which will be driven by new launches and a planned EV foray. Renault India is in the process of developing several new models, comprising two internal combustion engine (ICE) products and an A-segment electric vehicle (EV).

These upcoming cars are scheduled to commence production in 2025. In addition to selling three cars – Kwid, Kiger, and Triber – domestically, Renault India also exports to 14 countries and regions, encompassing South Africa, the South Asian Association for Regional Cooperation, and the Asia Pacific region.

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South Korea’s Hyundai invests $51 billion in EVs over 3 years

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South Korea’s Hyundai Motor Group announced a substantial investment of 68 trillion won ($51 billion) over the next three years to bolster its growth prospects in electric vehicles (EVs) and new mobility ventures, alongside plans to recruit 80,000 new employees. More than half of the investment, totaling 35.5 trillion won, will be directed towards establishing new research and development infrastructure and assembly lines specifically dedicated to EV production, the group stated. An additional 31.1 trillion won will be allocated for research and development endeavors focusing on EVs, including advancements in software-defined vehicles (SDVs) and battery technology.

The significant portion of the new hires, amounting to 44,000 individuals, will be dedicated to driving future business initiatives in electrification, SDVs, and achieving carbon neutrality objectives, the group revealed. Hyundai Motor Group, comprising Hyundai Motor and its subsidiary Kia, ranks as the world’s third-largest automaker by sales volume. The conglomerate also encompasses automotive parts manufacturer Hyundai Mobis and Hyundai Engineering & Construction. This strategic investment underscores Hyundai’s commitment to staying at the forefront of the rapidly evolving automotive industry, particularly in the realm of EVs and emerging mobility technologies.

The substantial allocation towards research and development reflects the group’s dedication to innovation and staying ahead of market trends. Additionally, the significant recruitment drive signals Hyundai’s confidence in its growth trajectory and ambition to expand its workforce to support future endeavors.

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