PINC Research neutral on auto sector

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PINC Research neutral on auto sector

PINC Research has come out with its report on automobile sector. According to the research firm the Indian automotive industry seems to be graduating towards bigger vehicles.

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PINC Research has come out with its report on automobile sector. According to the research firm the Indian automotive industry seems to be graduating towards bigger vehicles.

Compact SUV was the theme of this Auto Expo with three manufacturers Maruti Suzuki, Ford and Renault looking to hit the sweet spot with a sub Rs1mn product. Underpinning of a compact car and DNA of a SUV was visible in Maruti's XA Alpha concept, Ford's EcoSport and Renualt's Duster. Length of both XA Alpha and EcoSport production models is expected to be below the 4 meter mark to avail lower excise duty. The EcoSport is powered by the Ford's revolutionary 1-litre petrol engine capable of delivering 120hp power. Missing during the show was M&M 's mini Xylo which is expected to be launched in the current quarter.

Maruti Suzuki will be looking to expand its product portfolio with the launch of the Ertiga in the MUV segment. The vehicle is expected to be pitted against market leader Toyota's Innova and Mahindra & Mahindra's Xylo. Although the Ertiga is smaller compared to competition, we expect the same to be its USP. The Ertiga is expected to appeal more to personal segment as compared to the Innova, which also appeals to the commercial segment. The vehicle measures 4.2 meter in length and has a capacity to seat seven people. The Ertiga will be powered by a new 1.4 litre K-series petrol engine and a 1.3 litre diesel engine which is currently strapped on the SX4.

Undoubtedly the largest buzz created during the Expo was on Bajaj Auto 's latest offering the RE60. The RE60 could best be termed as a worthy upgrade to a three-wheeler and is no where near a car (Nano competitor). The management too has maintained its stance right from project conception to launch that they have no intention to enter the car business. Largely constructed in fibre, the RE60 would be powered by a 200cc DTSi engine delivering 35km per litre. Bajaj will be launching the vehicle first in Sri Lanka in the coming months. As per the management, Sri Lanka which is a large market, 90% of the three wheelers are for personal use. Hence RE60 too is expected to gain acceptance in personal segment. Although the RE60 is a step forward for the three wheelers, we doubt its relevance in the Indian market atleast at this point of time given the permit restrictions. In case the government allows use of these vehicles then Tata's Magic and Iris built on the Ace platform can be a strong competitor to RE60 in the urban commercial segment.

Looking at the SUV and MUV theme being played out at the Auto Expo, the Indian automotive industry seems to be graduating towards bigger vehicles. Although compact cars would continue to account for a bulk of the volumes, an upgrading customer could possibly look at the compact SUVs in the future. The compact SUV category (sub Rs1mn) could be the next big segment for the industry. Similarly the MUV space is heating up with products to woo the large Indian families. That said the current segment leaders, M&M and Toyota, would have their work cut out in order to defend marketshare.

Non-Institutions holding more than 90% in Indian cos

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To read the full report click on the attachment