How Maruti Suzuki Plans To Tackle SUV Challenge
Maruti Suzuki India Ltd. has been dominating the nation’s automobile market for the last two decades. Yet, the sport utility vehicle segment remains a challenge as competition heats up.
All other segments, including commercial vehicles, have been growing, according to Shashank Srivastava, executive director of sales and marketing at India’s largest carmaker. “It’s the SUV segment that has an issue at the moment so that’s where we are focusing on, including launching the new Brezza 1.5 litre and the new S-Cross 1.5 litre,” he told BloombergQuint’s Niraj Shah in an interview.
We believe that the mid-SUV segment, where we are lagging in market share, is something we need to look at very carefully and leverage our existing products to get higher market share there.Shashank Srivastava, Executive Director (Marketing & Sales), Maruti Suzuki India
Maruti Suzuki’s products in the SUV category, which includes only Brezza and S-Cross, are witnessing intense competition from the Hyundai Venue and Creta, Tata Nexon and Kia Sonet and Seltos.
Despite the improvement in the category mix, Maruti Suzuki’s market share in the utility vehicle segment has reduced from 24.9% as of FY20 to 22.9% as of the first half of FY21, according to a report by ICICI Direct Research. Higher demand for the company’s passenger cars compared to utility vehicles, the brokerage said, could impact its average selling price and hence the gross margin profile.
While companies like Hyundai and Kia Motors have presented a challenge with disruptive pricing, Srivastava said that’s not all that consumers are looking for. Instead, they’re looking at a vehicle’s value over a lifetime, including factors like cost of running, cost of maintenance, design and consumer satisfaction. “But you’re right, disruptive prices have to be taken note of and industry will take actions accordingly.”
The SUV segment in India, according to Srivastava, has grown from 7-8% in 2010-11 to 36% at present. It will likely occupy 44-45% of the industry in a few year’s time, he said, highlighting it as an area of immense importance for Maruti Suzuki.
Here are some other key highlights from the conversation:
- Maruti Suzuki’s overall retail sales grew 69% year-on-year in November, higher than the 52% industry growth estimate.
- Wholesales could be stronger than retail in January as companies push to increase dealer inventories.
- As far as daily production levels are concerned, even in November Maruti was operating at peak capacity.
- Industrial activity not getting hampered by small, weekend lockdowns.
- Company has slowly gained in its market share of small commercial vehicles.
- “Our market share this year has gone past 20% and that’s a good beginning for us but we are not resting.”
- Currently a small part of overall sales, it’s slowly building up and will continue to strengthen.
- Offering services in addition to new models and launches.
- The subscription model has been well received in pilot towns and cities, will expand pan-India from hereon.
Watch the full interview here: