Maruti Suzuki India’s (MSIL) premium retail channel NEXA, which completes seven years of operations in July and now contributes 20% of the automakers’ total sales is looking to go further upmarket. Sales of more profitable premium cars is key to the automaker, which is faced with a shrinking small car market. Overall sales in the hatchback segment have declined from 15.5 lakh units in 2018-2019 to 11.5 lakh units in 2021-22.
MSIL has proven adept at navigating challenging market scenarios in the past. Since the time NEXA was launched, the Indian auto market has shifted strongly towards SUVs, sedan and hatchback sales have declined, the transition to BS6 has ended the dominance of diesel fuel in the passenger car segment, and the industry is now rapidly moving towards electric vehicles (EV).
Launched in July 2015 with the long-term goal of achieving and sustaining 20% of MSIL’s sales, the NEXA play has paid off handsomely and it is now well placed to move further upmarket with new launches planned in the coming years.
The market performance of the new XL6, which is more expensive than its predecessor will also prepare the ground for newer offerings from the NEXA in the SUV space, with a new launch rumoured for later this year. Mobility Outlook spoke with Shashank Srivastava, Senior Executive Director, Marketing & Sales, Maruti Suzuki India, on the sidelines of the media drive of the new XL6 in Bengaluru to understand some of the developments at NEXA.
Premium Play
NEXA stands for ‘Next Experience in Automobile’ and MSIL chose to develop a new brand to appeal to more affluent urban customers, who placed a greater premium on design and an upgraded purchase and ownership experience. NEXA today delivers about 20% of MSIL’s total sales, which translates into approximately 300,000 vehicles sold per annum, Srivastava said. In comparison, MSIL sells approximately 15 lakh vehicles annually from its ARENA dealer network.
“If NEXA was an independent company, it would be the third largest in the industry with sales volumes of three lakh automobiles. NEXA in that sense has been very successful, different models have had different successes,” Srivastava said.
NEXA has brought in new and younger customers into the MSIL fold with a very high percentage of first-time buyers and has achieved sales of nearly 14.6 lakh units within six years of launch. At present, the NEXA portfolio comprises the Ignis, Baleno, Ciaz, S-Cross and XL6 models, and going forward, Srivastava said the company will try to introduce more products in different categories and try to increase sales volumes.
The bulk of NEXA’s sales come from the Baleno and Ignis, followed by the XL6, Ciaz and the S-Cross. While the Ignis is achieving volumes of about 3,500-4,000 cars a month, Srivastava said that sales of the S-Cross have not met expectations. “The segment has grown, but S-Cross sales haven’t grown as much. We started with the S-Cross’s positioning as a crossover, and we now feel this was a concept which in India is a little early in time and therefore customers clearly did not it associate it with an SUV,” said Srivastava.
There were similar debates within the MSIL teams about the launch of the Vitara Brezza and Baleno as well, he said. “But both these cars were a hit and our market share between 2014 and 2018 went up.” Similarly, there was a concern on the size of the Ertiga, and whether it needed to be larger. “We decided to launch the Ertiga, which redefined the MPV market and today it is selling very well, and we have 60% share of the MPV market,” Srivastava said.
The need to create a more upscale retail channel emerged around a decade ago. While from a brand perspective, MSIL stood for reliability, low maintenance, fuel efficiency and a strong countrywide network, a growing economy had given rise to a new chunk of urban customers, who were willing to spend much more on automobile purchases with aspirational value.
According to Srivastava, MSIL looked at every element of NEXA with great care, starting from the customer interaction aspects to the standard operating procedures (SOP) along with the decision to go paperless. Brand associations were also looked at closely, with NEXA being associated with fashion, travel and music.
NEXA has, in fact, sponsored the Lakme Fashion Week and International Indian Film Academy Awards (IIFA), while AR Rahman was chosen as the main partner for NEXA Music, which is supporting upcoming Indian musical talent. Srivastava said the response to NEXA Music was certainly an eye opener for him with its high engagement levels and surprised him with the huge young urban audience for this type of music.
Dealerships
At present NEXA has approximately 450 dealership outlets covering over 200 cities and towns, while there are approximately 3,250 ARENA outlets covering nearly 2,000 towns and cities. “We started off from the larger cities and then began expanding our reach. We look at the potential because NEXA volumes are slightly lower, especially in the smaller towns. So, we carefully study the viability of the dealerships. Once we feel that there is enough potential, that is the time we have a new outlet and cover the extra space.”
Responding to whether NEXA would look at the flagship store format, Srivastava said, “We find that consumers also are attaching greater experience and greater priority to brand experience… So, it is possible that at some point of time we have a flagship showroom – not so much for customer convenience or vehicle display – but to give the brand experience, and that has a very positive rub off on the brand.”
Meanwhile, even though the automaker would increase its digital presence, physical showrooms would still be indispensable, Srivastava said, adding, “A lot of our inquiries are now coming through the digital platform, with about 20-30% of our sales enquiries coming through the digital channel, while about 30-35% still comes via walk-ins into the showroom.”
Customers are increasingly comfortable with the company’s digitisation initiatives and MSIL would accordingly develop its dealerships. Srivastava said the company has now started talking of its market shares and showrooms in the digital landscape. At this stage, the company has over 1,100 digital showrooms.
From a digitisation perspective, the company has digitised 24 of the 26 touchpoints for the customer during a purchase process, with only the test drive and delivery of the vehicle requiring the customer’s physical presence. In that sense, showrooms will be ‘phygital’ for a long time, Srivastava said, however, the physical network will continue to remain important and expand because there is still tremendous scope for motorisation in India, he added.
Data, Personalization
Data is a major priority not just for NEXA but across MSIL. MSIL has sold more than 2.2 crore cars and has access to a huge amount of data on customer preferences and tastes. The company began storing this data from 2005, covering transactions ranging from car purchase, finance, insurance, accessories, maintenance and warranty, etc.
Srivastava said MSIL is now also looking at data gained from customer interactions on its websites, giving it access to both the interaction data pre-purchase and transaction data post-purchase. The data is crunched, allowing MSIL to discern customer preferences, helping in cross-selling and upselling. “Of course, for data privacy reasons, we do not examine the data individually but as a cohort,” Srivastava stated.
Srivastava said the automaker is also seeing a greater trend within customers for personalisation of their cars with accessories. In the case of NEXA, he said that despite many items such as music systems, GPS maps, seat covers, reverse parking sensors now being standard on many NEXA products, they are achieving accessories sales to the tune of approximately INR 23,000 per car on an average. He expects this trend to increase.
Driving The XL6
NEXA has been hobbled without access to a premium SUV in its portfolio and it has worked hard to hide the XL6’s people mover genes, largely succeeding with the facelift version. The XL6 is conventionally handsome with a now bolder stance and more aggressive design lines. The new machine-finished two-tone 16” alloy wheels also enhance the XL6’s looks. Overall, the new XL6’s exterior design is likely to find approval from its target customer audience.
NEXA’s march upwards in the premium segment is in evidence with the improved interiors on the XL6, which is also loaded with features. NEXA has aced the ventilated seats, which are effective within seconds and often needed to be kept at its lowest setting. While quality of interior plastics was acceptable, the overall interior ambience was welcoming, aided by the XL6’s quality black leatherette seats.
My 6.1” frame was immediately comfortable in the cabin, with good seat comfort and all controls falling easily to hand. Visibility was also excellent, though the lack of an auto dimming IRVM, smacks of cost-cutting. The XL6’s all-new 7” SmartPlay Pro Touchscreen Infotainment System features a more powerful processor, and the 360-degree camera was especially handy. Overall, the XL6’s infotainment system worked well.
The new XL6 is available only with MSIL’s all new K-series 1.5 litre Dual Jet, Dual VVT petrol engine, which puts out just over 100 hp, and maximum torque of 136.8 Nm @ 4,400 rpm. It also features an improved smart hybrid system with a more powerful Li-ion battery. This engine is also compliant with upcoming emissions regulations, the company informed.
Driving the manual version, it was evident that the smooth and refined engine did not have any performance aspirations. An extra cog in the 5-speed gearbox would have also been welcome. The highlight, however, was the excellent fuel-efficiency with the MID showing 19.5 kmpl, when driven conservatively at highway speeds of 90-100 kmph with two occupants. The fuel-efficiency figures of the XL6 will surely appeal to customers in the current environment of high fuel prices.
The gearbox is slick but the XL6 is not for the enthusiast, though the engine retains its smooth and refined nature all the way to the redline. While performance is adequate with two occupants, a fully loaded XL6 would require greater planning during highway overtakes. Ride comfort was excellent on good roads and bad, with more than ample ground clearance. We had an opportunity to test the brakes, when a somnambulant two-wheeler wandered into the middle lane on the highway, in short, braking performance was more than acceptable for this class of vehicle.
Overall, the XL6 is a competent automobile if a little short on excitement. It is smartly equipped, comfortable to drive and delivers excellent fuel-efficiency for a people mover. It is unlikely to shake up the market but will keep the fires lit at NEXA, until an SUV is added to its stable. The new XL6 also features a substantial price hike over the pre-facelift model and sales numbers will be watched closely by industry observers.