Maruti Suzuki India, the largest passenger car manufacturer in India, is likely to be a key beneficiary as the customer preference seems to be slowly shifting towards hybrid vehicles from electric vehicles (EVs), analysts said.
The pace of adoption of EVs seems to be slowing down due to challenges like lack of adequate charging infrastructure, long charging time and customers being hesitant to pay a premium over ICE vehicles.
Global automakers like Mercedes, Ford, GM, VW have deferred EV related investments, reduced their EV sales guidance indicating moderation in EV growth going ahead. Few of these auto OEMs are turning their focus back to Hybrids amidst shifting consumer preference, JM Financial noted.
Also Read: Stocks to buy: Maruti Suzuki, M&M, TVS Motor among top picks in auto sector by HDFC Securities
Similar trend is being witnessed in the domestic demand scenario for electric passenger vehicles (PV). Recently, Tata Motors has reduced its FY24 EV sales estimate by 20% to 75,000 – 80,000 units and also cut prices by upto ₹1.25 lakh per vehicle to drive wider adoption.
Meanwhile, Maruti Suzuki India is working on multiple technologies, such as Hybrids, EVs, Flex-fuel and Biogas in addition to ICE and CNG as the company believes multiple technologies can co-exist in the medium-to-long term.
“The company had a foresight back then (when it launched CNG) and we believe its current tech-agnostic approach is again a well thought-out approach against committing resources to a single technology,” JM Financial said.
Reports suggest that Maruti Suzuki is developing its own cost-effective ‘series’ hybrid solution for the small car segment and will continue to source Toyota’s Hybrid technology for larger SUVs and MPVs. It plans to launch five Hybrid models over the next 2-3 years.
As per JM Financial’s calculation, currently with 43% GST, the Total Cost of Ownership (TCO) of a mid-sized EV-SUV is 10% higher than Strong Hybrid Grand Vitara. It believes the rationalisation of GST rate can reduce TCO of a Strong Hybrid Grand Vitara by another 8% and that would bring it almost at par with compact EV-SUV.
“Tax rationalization on Hybrids could act as a fillip and shift consumer preference towards this choice of powertrain. Given the evolving global landscape and Maruti Suzuki’s tech-agnostic approach, we remain positive on the company,” JM Financial said.
The brokerage firm maintained a ‘Buy’ rating on Maruti Suzuki shares and raised the target price to ₹13,000 per share from ₹12,250 earlier, implying an upside of over 13% from Tuesday’s closing price.
At 12:30 pm, Maruti Suzuki shares were trading 2.21% lower at ₹11,248.50 apiece on the BSE.
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Published: 28 Feb 2024, 12:31 PM IST