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Strong hybrids to take on diesel: IIFL Capital Services

12 Sep 2022 , 01:28 PM

The model assumes significance for multiple reasons:
1: HyRyder would also be sold under Maruti badge as Grand Vitara
2: Grand Vitara is Maruti’s first model in the Compact SUV (4m+) category and is critical to Maruti’s ambitions to increase UV market share
3: The HyRyder and Grand Vitara also come with strong hybrid powertrains, which would be their interim solution in India before launching BEVs.

Going by history of common models shared by Maruti and Toyota, analysts at IIFL Capital Services expect Grand Vitara to be launched at similar aggressive price points. The pricing of strong hybrids is close to diesel models offered by competition. Given similar price points, rich features and much higher fuel efficiency versus diesel, they believe Toyota/Maruti may be able to attract buyers of competitors’ diesel cars.
This may provide a boost to Maruti’s SUV and overall market-share.

Toyota HyRyder hybrid launched at an aggressive price-point

Toyota has priced the strong hybrid variants of HyRyder at Rs1.51-1.90 million. Price premium of the Strong Hybrid versus comparable petrol model is only Rs0.19 million. This price premium is much lower than expectations, especially after Honda launched its City Hybrid recently at a much higher price difference versus City Petrol.

Hybrids well-placed to take on competitors’ diesels

Pricing of the HyRyder strong hybrid variants is similar to that of diesel automatic transmission models of competitors. The HyRyder and Urban Cruiser boast of rich features, comparable and in some cases, exceeding those offered by competition. More importantly, the hybrid variants command a fuel efficiency of about 28kmpl (ARAI certified); this is much higher than that of competing diesel models. Higher fuel efficiency is one of the key reasons for car-buyers to opt for diesel. Overall, analysts at IIFL Capital Services believe the hybrid variants are well-positioned to attract buyers of competitors’ diesel cars.

Industry shift to SUV hurt Maruti in recent years

Share of UVs in the Indian PV industry increased from 25% in FY17 to close to 50% in FY22. Competition has been most active in this category, while Maruti is under-represented. Maruti’s market-share in PV (ex-UV) has been quite steady at about 65%. However, market-share loss in UV (down from 28% in FY19 to 20% in FY22) and the industry shift to UV brought down Maruti’s overall PV market-share from 51% in FY19 to 43% in FY22.
 
The Grand Vitara and new-gen Brezza may help Maruti gain share in UVs

Maruti’s recently launched new-generation Brezza has met with good response. It has accumulated over 100k bookings in 2-3 months since launch. The Grand Vitara has clocked close to 50,000 bookings, so far. Management mentioned that 44-45% of these bookings are for the strong hybrid. Given aggressive pricing, there is a strong case for Maruti to gain market share in the SUV category.

Maruti exited diesel in FY20, but competitors have continued selling diesel cars quite successfully

Maruti exited the diesel segment in H2FY20. Although share of diesel cars in the Indian PV industry has come off from 37% in FY19 to 19% in FY22, analysts at IIFL Capital Services feel 19% is a sizeable number. With the hybrid variant of Grand Vitara (similar price point, comparable features and much higher fuel efficiency), they believe Maruti would be in a good position to attract buyers of diesel cars.

Strong hybrid may be able to attract buyers of competitors’ diesel cars

Toyota HyRyder – Hybrid Hyundai Creta – Diesel Kia Seltos – Diesel
Engine
Capacity 1490cc 1493cc 1493cc
Power 114 BHP 113 BHP 113 BHP
Torque 141 Nm 250 Nm 250 Nm
Price (Rs 000s) e-Drive: 1511-1899 Automatic: 1809-1824 4 Automatic: 1659-1865
Fuel efficiency ~28 kmpl ~21 kmpl ~21 kmpl

Source: Company, Car portals; IIFL Research; Note: Price is ex-Showroom

Related Tags

  • Auto
  • Auto India
  • Maruti
  • Maruti Suzuki
  • Maruti Suzuki India
  • Toyota
  • Urban Cruiser HyRyder (HyRyder)
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