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Event update: Auto Expo 2018 - Electric vehicles; the key focus

Auto Expo 2018 was focussed on electric vehicles (EV), while 2016 was concentrated on SUVs. Almost all passenger car original equipment manufacturers (OEM) showcased electric variants of their existing models (Tata Motors and M&M), with all commercial vehicles (CV) manufacturers showcasing electric buses (Ashok Leyland, Goldstone Infratech, JBM Auto and M&M). Although the conventional vehicle segment saw a few significant launches – Toyota’s Yaris, the New Swift and some interesting concepts - the number of new products on display was fairly limited. Kia’s display of existing products in other markets (South Korea and Europe) could be a precursor to its entry in the Indian market expected over the next 3 years. In the 2 Wheelers (2W) space, the limelight was on premium motorcycles and a shift to 125 cc scooters (TVS’ Ntorq, Hero’s Maestro and Duet along with upgrade of Honda Motorcycle and Scooter’s India (HMSI) 125cc Activa 5G.

Electric vehicles - closer to reality

All major OEMs barring Maruti Suzuki India Ltd (MSIL) revealed electric versions of their vehicles across CVs, 2Ws and passenger vehicles (PV), implying the industry is preparing for an EV-centric car market.

PVs and 2Ws- Tata Motors and M&M were at the forefront showcasing electric vehicles. While TAMO showcased electric variant of Tigor, M&M showcased that of KUV1oo. While Hyundai showcased Ioniq electric sedan, it is not clear whether this would be the first electric car from its stable in FY20. Besides, MSIL showcased its concept car Future S while Honda displayed the hybrid variant of its luxury sedan, Accord. In the 2W space, TVS showcased its concept electric scooter Creon, while Hero Electric had its entire range of 2Ws starting from Rs28,000 (Hero Electric is not affiliated with HeroMoto Corp).

CVs - In the bus segment, Ashok Leyland (collaboration with Sun mobility for battery technology) displayed its e bus Circuit, which will be commercially available in 6 months with a swappable battery, as per the company. It is expected to have one lithium ion battery compared to a pack of cells in other electric, buses which can be changed at layover times, reducing the cost of the bus. Tata Motors highlighted its electric bus StarBus EV, while Hyderabad-based manufacturer Goldstone Infratech in collaboration with Chinese manufacturers BYD displayed its electric buses. JBM Auto too has forayed into EV with its bus offering, Ecolife. 

Fewer new PV launches; 2Ws seeing premiumization

Within the PV space, Toyota’s Yaris was the only significant new launch – the vehicle is likely to compete with Honda City/ Maruti Ciaz. Additionally, MSIL showcased the New Swift (with Automatic Manual transmission and at a starting price of Rs4.9 lac ex showroom, Delhi) while Honda displayed the facelift in Amaze. M&M showcased Ssangyong G4 Rexton SUV as its premium offering, while TAMO displayed its concept SUV Hsx. Kia showcased its portfolio from existing markets (notably Kia SP/Kia Stinger), which we believe could be a precursor to the eventual introduction of Hyundai’s sister brand in 2020/2021. Fewer product launches compared to Auto Expo 2016 (when MSIL displayed the Brezza/Ignis, Volkswagen (VW) Ameo, Honda BRV, Tata Motors Hexa/Tiagio) signifies competitive intensity in the mass market segment may remain benign over the next few years.

In the 2W space, there seemed to be a clear shift towards powerful scooters – TVS introduced the 125 CC NTorq while HMCL launched the Maestro/Duet in 125cc options. Within the motorcycle space, the focus seemed to be more on the premium segment – HMCL showcased its 200cc bike, Xtreme, HMSI introduced the X-Blade while UM highlighted its cruiser motorcycles.

Our View

Auto Expo is an indication that key players are preparing for a government-backed introduction of EVs. While the extent of disruption from EV launches is still unclear, there is no doubt that investments in the space have begun in earnest. Fewer launches within the PV segment signifies that competitive intensity could remain benign in the next 2-3 years – a significant positive for MSIL, in our view.

We continue to prefer MSIL on benign (competitive intensity, sustainable advantages) and Eicher Motors (strong brand equity in a niche segment) in the automobile space.