DDespite registering a 20.7 per cent growth in unit sales at the end of FY23, the country’s largest carmaker Maruti Suzuki India Ltd somewhat missed out on the party. As ‘animal spirits’ return to the Indian economy, or at least among car buyers, MSIL’s growth was less than surprising 26.7 percent Growth of the overall passenger vehicle market. This meant that the company’s market share dropped to just 41.3 per cent since its inception, according to data provided by the Society of Indian Automobile Manufacturers.
Sure, Part of This Decline Was Due to Semiconductor Shortage, which you must have heard about if you have been to a car showroom recently. MSIL executive director of sales and marketing, Shashank Srivastava, says the company lost “170,000 potential sales” due to the shortage of semiconductors and CNG kits. But he believes that by the time the festive season starts in the second quarter of this financial year, the impact of these shortfalls will completely subside.
However, Maruti Suzuki’s management says that the ‘real’ reason for their sales decline was the company’s limited presence in the growing sports utility vehicle (SUV) segment. Unsurprisingly, MSIL is on a tear to launch an SUV to make up for its losses. Not only have they updated the Brezza, but in the last six months they have launched the Grand Vitara, fronx And Jimny,
“Our market share in the SUV segment has increased from 12.3 per cent in the last financial year to 20 per cent now and we aim to capture 24-25 per cent in the segment,” Srivastava said.
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Invicto against domestic SUVs
The company’s management clearly feels that they have lost out to domestic manufacturer Tata Motors, which grew to approx. 46 percent in sales last year, and Mahindra, which had an even more impressive 59 percent Development. Both these manufacturers got tremendous strength from their SUV portfolio. But as Srivastava points out, MSIL also has big dreams. As part of a global alliance between its parent company Suzuki Motor Corporation and the world’s largest carmaker Toyota Motor Company, MSIL and Toyota’s Indian arm Toyota Kirloskar Motors (TKM) are sharing the vehicle. You can see this with the Baleno and Glanza and even the Urban Cruiser Haider and Grand Vitara. But the Maruti Suzuki Invicto, a variant of the Toyota Innova Highcross to be unveiled early next month, is a step in that collaboration.
This leads to a relatively obvious question. Can a Suzuki ‘S’ badged vehicle be sold in India for Rs 30 lakh or more? After all, despite Maruti Suzuki pushing SUVs, the best-selling cars in May 2023 were all Maruti-Suzuki hatchbacks – Baleno, Swift and Wagon R, respectively. It was followed by Hyundai Creta, Tata Nexon and BrezzaAll of which are SUVs.
“We have 60 per cent share in the sub-Rs 10 lakh car market in India. But what I find interesting is that in the Rs 15-20 lakh market, our share has grown from 26 per cent last fiscal to over 30 per cent now,” Srivastava told me.
Nexa push and annual growth
One of the reasons why MSIL climbed the ‘desirability’ charts was the establishment of its Nexa dealership network. A decade ago when MSIL launched the imported Grand Vitara and Kizashi, which were very well regarded by those who drove them, the company’s mass-market brand image meant that selling them was a challenge. According to Srivastava, Nexa was introduced to make Maruti Suzuki upmarket and it has been a roaring success. The executive director claims it had the third highest sales volume after Maruti-Suzuki Arena (their other network for more affordable vehicles) and a rival (Hyundai).
“We want to make Nexa the second largest sales network in India after Arena,” he says of his ambition that will not only help MSIL regain lost market share but also trump competition. “People did not believe that we could sell cars above Rs 20 lakh. But the success of Grand Vitara has proved us right, and I am sure we will do well with Invicto,” says Srivastava.
However, despite the strong sales growth (13 per cent) in the first two months of the new financial year as compared to last year, Srivastava is tight-lipped about the annual growth. He says, “Last year in June our sales were off the charts, and I doubt we can maintain that momentum as an industry. I believe the growth for this financial year is 5-7 percent, with annual sales touching 4.05 – 4.15 million vehicles.
One reason for their conservatism is that the events of the past few years have taught carmakers to hold their horses. “Should there be an interest rate cut or a fuel-price cut? It is difficult to predict given the geopolitical situation. What if El Nino hits and agriculture is affected and thus food inflation rises? I think the RBI has done a very good job of managing inflation so far and once we know how the monsoon is faring and there is geopolitical stability, maybe they can talk about the growth rate. Will do something
Many have predicted that Maruti Suzuki will not survive. First, it was foreign invasion. But the carmaker left behind Ford and General Motors. And now, it is SUVs from domestic carmakers that are competing. Will the Maruti Suzuki Invicto prove that the company is truly Invictus?
@kushanmitra is an automotive journalist based in New Delhi. Thoughts are personal.
(Edited by Ratan Priya)