Honda Amaze to Have Minimal Impact on Maruti Volume

The rough environment for passenger vehicles a much tougher challenge for Maruti than Honda AmazeThe stock value of the largest passenger vehicle maker have declined by 20 percent in last two months.

At present, the biggest highlight is ‘Honda Amaze competes Maruti’s Swift Dzire’.

While Honda Amaze is being expected to snatch a substantial market share of Maruti sedan Swift Dzire, the other weaker brands such as Chevrolet Sail, Toyota Etios will be more severely affected by it. Some of the biggest strengths of Honda Amaze is not only its prize but also the servicing and after sales cost advantages that it will be providing. Several brokerages have reduced their stock prices for Maruti given the economy slowdown and increasing competition. JP Morgan recently reduced the price target to Rs.1535 while the value of P/E value has been incremented 14 folds. The basic reasons for these steps have been quoted the very same stagnant growth of auto industry and increasing competition. Citi Research too gave neutral ratings on stock because of the puzzling macroeconomic condition and industry over view.

However, Bloomberg still has a positive outlook on Maruti’s stock. As per the target prices, an expected rise of 8 percent still exists. Some of the main brands that will be affected by tough competition will be smaller brands that were already bearing pretty small chunks of market. Honda Amaze at present is directly competing with Maruti Swift Dzire. As Honda likes to claim that fuel efficacy of its car is ten percent more than Dzire. While the power aspect leads by 33 percent and price is pretty close to Swift Dzire.

All these factors will directly help the Japanese car maker in acquiring bigger market share. Another under four meter car that is being widely anticipated across the market is the Mahindra & Mahindra’s upcoming Verito Vibe. The hatchback is being expected to provide M&M a firm stand against Maruti’s another strong point Swift. The market share of Swift will be lesser affected by Honda Amaze as compared to Dzire, as volume production is one of the biggest drawbacks of Honda at present. To overcome this weakness Honda would need at least 12 months. However, other players in the hatchback segment like General Motor’s Spark and Tata Manza are going to more affected by this new entry rather than Maruti Swift that is the market leader at present.