Maruti Suzuki India is targeting at least 25% of the SUV market with the recently unveiled Jimny and Fronx fuelling the strategy, said Shashank Srivastava, Senior Executive Officer- Marketing and Sales, in a recent interview with Mobility Outlook.
When this goal is achieved, the company will end up becoming India’s leading SUV player and ahead of rivals such as Mahindra & Mahindra, Tata Motors, Hyundai etc.
According to Srivastava, the launch of the Grand Vitara last September has already acted as a catalyst in Maruti’s growth plans in SUV. This is borne out by the fact that its share has grown from 10.5% in FY 22 — with the Brezza being its sole SUV — to nearly 18% today.
The good news is that the Fronx and Jimny have already received 39,000 bookings with the former accounting for 23,500 and Fronx taking up the balance 15,500 (bookings). A clearly pleased Srivastava said Maruti is “looking for much better volumes” in the SUV space and if it is able to “hit the 35% mark”, this will help the company reach an overall market share of beyond 50% in passenger vehicles.
Brezza As Lone Warrior
Maruti had seen its domineering position falter from FY20 and this led to its share falling to 43% two years later. With customers shifting to SUVs, there was little it could do as competition made the most of the situation. Till last September, Maruti only had the Brezza in its lineup and even though it was the segment leader, this was of little use in boosting overall market share.
Right now, with the Jimny and Fronx coupled with the Grand Vitara, the mood is more buoyant but there are still some challenges ahead. Srivastava said inflation was definitely an area of concern while irregular monsoons coupled with the El Nino spectre could derail retails. The RBI’s projection of 6.4% growth in the economy in FY24 is, however, a relief of sorts, he added.
Beyond these headwinds is the existing supply chain issue which, when at its peak, had caused Maruti to produce only 40% of its capacity in August 2021. Things have clearly improved dramatically since then with the company now using 94% of capacity but the fact remains that it lost around 47,000 vehicles in the third quarter for FY 23 due to supply chain constraints.
Srivastava added that the last quarter, which just went by, could show an encore of this situation. While comparing this to the Charles Dickens classic, A Tale Of Two Cities, he said models like Baleno , Swift and WagonR have sufficient supplies while Brezza, Grand Vitara, XL6 and the Ertiga are still affected by the chip crisis.
New Design Language
Srivastava admitted that another reason for tepid market sentiment could be attributed to Maruti’s design language. Its model lineup has generally been synonymous with a “somewhat blunt look” and solid block designs. However, new age customers prefer flashier designs and are clearly not attracted to staid offerings.
Keeping this in mind, Maruti changed its design language to ‘Crafted Futurism’, which debuted with the Baleno launched in February 2022. The new language has allowed the automaker to play around with design and go in for a sharper look in its older models.
While the design language, which rests on three major pillars (NEXpression, NEXtech and Experience), was meant for vehicles sold through the Nexa channel, those retailed in the mass Arena network are also seeing some upbeat and edgy design. A case in point is the Brezza.
Srivastava said these changes would now strike a chord with younger customers and have been accompanied by change in the infrastructure of showrooms.
“Arena showrooms have been completely revamped to appeal to a more connected and technology-savvy young consumer. Nexa was always more sophisticated and is now reaching out more strongly to the new generation as well,” he added.
According to him, the recent addition of connected features with Suzuki Connect is also a step forward in meeting the needs of new age buyers.
Confident About Hatchbacks
Maruti’s hatchback space has shrunk from 45% to 36% in recent years which has also been a key reason for its fall in market share. Overall, this segment is expected to close at 1.36 million units in FY ’23 with Maruti’s share being 70%.
Srivastava was confident that hatchbacks would remain relevant especially with the reality of India’s young buyers. With 65% of the population under 35 coupled with higher disposable incomes and the reality of poor public transport, these customers would seek affordable mobility options.
“Buyers below the age of 35 have always accounted for 45 to 47% (share of hatchbacks) for the last 20 year and we will continue to see a lot of first-time customers,” he added. However, price increases are hitting the entry level segment and these have been a result of various regulations starting with the transition from BS IV to BS VI emission norms, making airbags and ABS mandatory etc. The steep increase in raw material costs has also been an added factor.
Reality Check For Sedans
The sedan segment is not doing so well either and its share has fallen from a peak of 23% (and yearly sales of 6.3 lakh units) in FY ’16 to 10% today. Maruti has over 50% in the entry-level compact sedan where its Dzire is a hit both with personal buyers and fleet owners.
“We see potential in entry sedans and in the midsize, where we have the Ciaz and are using hard, that segment has been declining,” he added. Interestingly, Hyundai Motor India, at the recent launch of the new Verna, had stated that the midsize sedan was expected to grow at 21% CAGR till 2024.
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