All you need to know (#2/4) - Automobile OEM's - 4 Wheelers
Your one stop shop to understanding the automobile sector in India
All you need to know is a series focusing on sectors and themes -
The first part of the series focuses on Automobile OEM’s, the tailwinds, the disruptions and how and where are the listed companies placed
Let’s start with the basics -
OEM’s can be broadly classified into sub-segments i.e. -
2W – Scooters / Mopeds / Bikes
4W – Small (Hatchback and Sedans) and Large Cars (SUV’s and Van’s)
3W – Goods and Passengers Rickshaws
CV – Tempo’s, Trucks, Buses etc. (LCV / MHCV )
Agri-Equipment – Tractors, Tillers etc.
Construction Equipment – Cranes , Backhoe loaders, Excavators etc.
In the first part we focused on 2 Wheelers (Refer) - OEM 2 Wheelers
In the second part we focus on 4 Wheelers -
4-wheeler market is ~3,30,000 crores market , 4 wheeler is the only market which continues to hit all-time highs with volumes being 25% higher than 2019, though growth is expected to be low single digits in FY25.
Indian Automobile market is dominated by 4 large players - Maruti, Hyundai, Tata Motors and Mahindra.
Below are the market share trends over the past 15 years.
Usually market share shifts happen due to a change in trend, for example from 2012 to 2019, when Diesel vehicles were going out of favour and CNG Vehicles were picking up, Maruti Suzuki gained ~1300 bps.
Similarly, with large cars and SUV’s being in favour, we have seen them replacing small cars resulting in market share gains for Mahindra and Tata.
Dissecting the 4W market into 2 parts are
Small cars - Hatchbacks and Sedans
In Hatchbacks& Sedans Maruti has 71% & 47% market share. (Swift, Wagon R, Baleno, Dzire, Spresso)
Large Cars - SUV’s and Vans
•In Hatchbacks& Sedans Maruti has 71% & 47% market share. (Swift, Wagon R, Baleno, Dzire, Spresso)
What are the top 10 car models sold in India in FY24 ?
Maruti absolutely dominates the rankings with 6, followed by Tata with 2 and Mahindra and Hyundai with 1 each.
Exports as a market -
Unlike 2W, exports is much a smaller part for 4 wheelers, with exports contributing 20% / 13% to Hyundai and Maruti.
EV -
EV penetration in 4W is largely limited (~2.4% v/s ~5.8% for 2 wheelers) owing to no material presence from top 2 players.
However, launch of Hyundai E-Creta and Maruti Suzuki’s E-Vitara will aid penetration materially in FY26 and beyond.
E-2W is largely captured by Tata Motors due to early and succesful launch of (Nexon, Punch, Curvv and Tiago). MG Windsor and Comet has started picking up well.
EV market share will mature only post 6-7% penetration and clear winners will be identified only post higher penetration.
How has FY25 been for 4 wheelers and where are they placed ?
FY25 till December had been tepid vis - a - vis other categories with growth slower than 2&3 W.
Companies have reported tepid numbers with Mahindra and Toyota outperforming the market at the cost of Tata, Hyundai and Honda.
Conclusion - Broadly 4W has seen slowdown in FY25 so far, though numbers have been encouraging in Q3. There are pockets where each of the companies are placed which can benefit them, broad one liner for where each company is placed and what can help them grow faster.
Maruti Suzuki - Maruti Suzuki has multiple power brands, though MS for Maruti in SUV’s is still tepid. A come back of Sedans and Hatchbacks and strong rural recovery will disproportionately benefit Maruti vis-a-vis other players.
Hyundai - Hyundai’s newer launches especially on E-4W are critical for the company gaining material market share.
Mahindra and Mahindra - Mahindra’s new launches and pick-up of SUV has been well accepted in the market resulting in material MS gains. EV portfolio’s acceptance of M&M will be key to monitor.
Tata Motors - Tata Motors generates ~77% of profit from JLR. Success of JLR is dependent on JLR’s performance in USA, Europe and China. Domestic PV is not a key driver for Tata Motors at this scale.
For other sub-segments kindly refer
If you like the post, kindly check out other articles and kindly consider subscribing or sharing. Drop a comment, if there are any-other sectors which you would like to read.