Maruti Suzuki Is Now Asia’s Sixth Most Valuable Car Brand, Mahindra Is Seventh
Asia as an automotive market has been growing rapidly in the past few years. A recent market capitalisation (market cap) evaluation has revealed an interesting finding. In the latest market cap ranking for Asia, two Indian companies have managed to rank in the top-ten- Maruti Suzuki and Mahindra. According to this evaluation, Maruti Suzuki is now the sixth most valuable car company in Asia while Mahindra is the seventh.
First of all, this evaluation was based on market capitalisation and not on volumes of profitability. Market cap is essentially the value of all outstanding shares of stock of a company, in dollars. It is calculated by multiplying the current share prices with the total number of shares. For example, if a company has 20 shares, each priced at $10, its market cap would be 20 x 10 dollars, or $200. Market cap is a solid indicator of the general investor perception of the brand and its value in the open market.
According to the data put out by CompaniesMarketCap.com, Maruti Suzuki has a total market capitalisation of $42.98 Billion. It ranks sixth in the list. It has surpassed the Japanese parent by a fair margin as the latter has a market cap of just $23.15 billion.
So, how did Maruti Suzuki do this? Well, the reason, we believe, is the large size of the Indian market and the company’s unmatched scale, trust and acceptance here.
Frankly, Maruti Suzuki isn’t yet a leader in the EV space here. Its portfolio in India focuses heavily on internal combustion products. But aggressive scale and value-centric approach have made Maruti Suzuki stay at the absolute top of sales charts consistently. It still believes in the small car push- a formula that has been working well for years. Maruti’s valuation is built around its dominance in India’s passenger car space.
Taking the seventh position is Mahindra with its $37.79 billion market capitalization. The two have a collective market cap of $80.77 Billion. Notably, both Maruti Suzuki and Mahindra have more market cap than Honda, in Asia. Honda’s cap stands at $34.36 billion and ranks eighth in the list.
Mahindra, in fact, has had an interesting valuation journey in the past few years. It was once seen as a company that makes Utility vehicles, farm equipment and legacy SUVs. In the past decade, this Indian company has had a major transformation.
From a legacy SUV player, it has become a premium SUV maker and an aspirational brand for many. Mahindra has had major achievements even in the EV segment. The Electric Origin range, comprising BE6, BE6 FE, XEV 9e and XEV 9S, is probably the carmaker’s biggest step there. The launch of these products and the acceptance that they have had here, helped in re-shaping the valuation story.
Now, let’s talk about the top three. Hyundai, valued at $125.90 billion is at the third position. BYD, with its $130.46 billion cap ranks second and at the top is Toyota with a massive market cap of $234.26 billion! Clearly, it remains the leader among Asian automakers.
It should also be mentioned here that a high market capitalization may not directly mean higher vehicle sales (volumes). It, instead, shows what investors believe a company can achieve in the future. In other words, the investor's confidence.
The data also shows that the gap between traditional automakers and new-age EV makers is narrowing, in terms of market cap.