Maruti Suzuki India (MSIL) continues to remain bullish about the entry-level car segment even while the momentum is clearly with SUVs right now.
According to Shashank Srivastava, Senior Executive Director (Marketing & Sales), MSIL this is a very important product category to enable motorisation across the country. To that extent, he told Mobility Outlook, it is still a key launchpad for any OEM.
This also explains why Maruti has invested around INR 2,620 crore in upgrading its existing hatchbacks comprising INR 1,500 crore for Baleno, INR 550 crore for Celerio and INR 570 crore for the recently launched Alto K10.
Yet, it cannot be denied that SUVs are ruling the roost now with a 40% market share while hatchbacks have shrunk to 38% with the entry-level in particular being the most affected. Other manufacturers such as Hyundai, Honda and Nissan have also pulled the plug on models such as the Santro, Brio and Datsun when it was clear that manufacturing them was no longer viable.
Srivastava said one of the reasons for the entry-level debacle was due to the “exponential rise” in the price tags of the models. This, in turn, has been due to a result of various regulations starting with the transition from BS IV to BS VI, making airbags and ABS mandatory, along with the higher GST levies in place.
Further, the steep increase in raw material costs has been a challenge even while Srivastava said Maruti was doing its best to absorb these hikes. He was hopeful that with economic growth back on track following the pandemic, the company is confident that the entry-level segment will also bounce back.
SIAM data also shows that the four top selling models are from this product segment with the Alto 800 topping the list in FY21 and the Wagon R in the following fiscal (the Baleno is now reporting brisk sales).
Whilst on the subject of the Alto, Srivastava said at the time of K10 launch that its sales have grown among the buyer base of under 35 years from 37% in FY13 to 55% in FY22.
Concurrently, Brezza customers in this same age group increased from 35% to 44%. With a greater number of younger buyers, there is also more demand for features such as infotainment screens and digital instrument clusters, he said.
For instance, when the first generation Alto K10 made its debut alloy wheels were considered an upmarket addition, whereas with the new model, the infotainment system and digital instrument cluster have taken centrestage.
Positive Outlook
Manish Raj Singhania, President, FADA, said the industry has not seen many launches in the entry-level segment in the last few years. Now with Maruti launching a number of hatchbacks, he was confident that there would be greater levels of excitement in the market.
According to him, the post-COVID scenario has changed the customer's perception of a car and they now want home-like comfort features to be provided in their vehicles.
SUVs Remain Top Focus
There is no question, though, that SUVs are the go-to choice for customers right now. FADA August 2022 data shows that Maruti’s share was down to 39% from 42.44% in the same month last year. Srivastava admitted that this was due to inadequate offerings in the SUV space.
This is expected to change now with plans to launch five SUVs in FY23 including the Brezza and Grand Vitara which have garnered bookings of over one lakh and 50,000 respectively.
Srivasatva was confident that the Grand Vitara would not only grow the segment but also claw share from rival models such as the Hyundai Creta and Kia Seltos. He added that the company would launch multiple SUVs at various price points and extend its hatchback pricing strategy to this space too.
In the bread-and-butter entry-level SUV segment, Maruti will have multiple products with similar pricing to provide customers with multiple options from the same brand. According to FADA’s Singhania, the company can make up lost ground if it launches SUVs in the INR 8-10 lakh bracket.
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