Maruti: Losing speed

Business may be dull till the launch of A-Star.

India’s biggest car maker, the Rs 18,412 crore Maruti Suzuki, has a hit a speedbreaker in August with volumes in the home market skidding nearly 11 per cent lower.

While the Swift and Swift Dzire continue to find takers, Wagon-R, Zen and the Alto are finding the goinmg tough. Hyundai Motor’s i10, however, did roaring business to push up volumes for the Korean car maker by 34 per cent, albeit on a much smaller base. On an even smaller base, General Motors managed volumes which were only 4.4 per cent higher. Mahindra and Mahindra’s Logan is losing steam, with volumes coming off 35 per cent to 1,464 units.

As for its utility vehicles (UVs), August has seen a marginal recovery with volumes up 2 per cent after a fall of 8 per cent in the segment in July. M&M had hiked prices for UVs in June and analysts believe that regardless of higher input costs, prices shouldn’t be raised any more.

High interest rates, lack of credit and inflation are keeping buyers away though sales could pick up in the festive season. Maruti has lined up the A-star, which if competitively priced, could turn its fortunes.

Meanwhile, the newly launched Indica Vista from Tata Motors could take away share from the Swift Dzire. M&M ‘s Ingenio could boost its volumes.

The Maruti stock recovered to Rs 634, just down 2.56 per cent, on Monday. At these levels, the stock is 10.4 times its estimated FY09 earnings and is reasonably valued.