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Saturday, November 22, 2008

Can Maruti Suzuki A-star lift up Maruti Suzuki's falling share prices?

Maruti Suzuki India Ltd. (BOM: 532500) launched its latest model car, Maruti Suzuki A-Star on November 19, 2008. It is the first Suzuki car to be produced in India. Now the million dollar question is: Will the A-Star save Maruti Suzuki falling share price? Though A-Star comes with some impressive upgrade it failed to impress the investors. The company’s share prices hit the lowest point for the first time in last three years. In addition, the global credit crunch and falling domestic demand created serious problem. Famous Korean auto-maker, Hyundai Motor India Ltd. cut down its production by 10%. Maruti also admitted of cutting production at its Delhi Gurgaon plant. Livemint.com reports:

While Maruti has reaffirmed its fiscal year 2010-11 target of exporting 200,000 vehicles, that now seems like an ambitious target. For one, its contract manufacturing deal with Nissan Motor Co. for 50,000 vehicles has still not been finalized. Besides, with most global auto makers feeling the heat of the slowdown, it’s unlikely that Maruti Suzuki’s exports division would go unscathed.

As far as the domestic market is concerned, the launch of the A-Star should help the company regain some lost market share in the A2 segment.

In June 2009, Maruti Suzuki is going to launch another new model named Splash which would further help the company but Maruti will not make much revenue in a sinking market. Yesterday, Maruti Suzuki shares were priced Rs 502.95 at 12.06 pm. On Thursday, the price was Rs. 468.25.

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Livemint.com

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