Analysts at Deutsche Bank forecast flat volumes for Maruti in FY20 (vs. the industry forecast of +3 per cent), and expect the company to lose 200 basis points (bps) of market share.
The brokerage firm believes that a loss of market share in a weak demand environment could lead to higher discounting pressure as well. The bulk of the market share loss was driven by the success of the competition's models. A similar scenario could play out over the next 12-18 months.
“We expect Maruti to lose 200bps of market-share in FY20, after a long period of gains (1,300bps during FY13-19). Maruti has been able to launch a number of successful new models over the last five years, strengthening its leadership position (51 per cent market-share) across categories. Most of these models were in segments in which Maruti had no presence. Hence, they expanded the addressable market for the company,” the brokerage firm said with ‘hold’ rating on the stock.