is marutis attempt to become a p
Altair Club Cars Is Marutis attempt to become a premium brand succeeding?

Is Marutis attempt to become a premium brand succeeding?

40 years since the first Maruti-800 rolled out from its factory, the company has come a long way. But did the champion of small cars miss the boat when it comes to the premium segment?

Foreign to wagonr most of the hits delivered by maruti suzuki in india catered to the middle income group since its inception in india in 1983 the company had its ear to the ground it knew what a common man wants an affordable car with good mileage coupled with low maintenance it explains why maruti gets 43 percent of its sales from non-metrocities the company

Has been equally focused on urban markets too which too has mixed segments and a greater appetite for high-end cars as part of its strategy the company had in 2015 launched nexa dealership its premium models like crs baleno and suvs such as the new ertiga and the xl6 all sold through nexa since its inception over 1.6 million cars have been sold cumulatively across

400 plus nexo outlets as of fi-22 the premium focus is also reflected in the average selling price now according to a company official the average selling price of maruti’s models has gone up to 7.12 lakh rupees from 6 lakh rupees 3 years back for decades maruti commanded premium market share in the passenger vehicle segment but then the road turned bumpy stiff

Competition squeezed its sales and its market share started to fall from a peak of over 51 in fy 19 maruti suzuki’s market share in the personal vehicle segment fell to 43 in fy 22. the management acknowledged this loud wake-up call maruti chairman rc bhagava in a recent post earnings call said that small cars which used to be the bread and butter for the company

Lost the butter so what went wrong with the company the fate of maruti was clearly tied to small budget cars and the rise of suvs pushed the sedans to margins according to a chrysal report the share of small cars in the passenger vehicle segment declined from 65 percent in fy 12 to 45 percent in the first nine months of fy22 meanwhile the share of suvs has shot

Up to 40 percent in fi 22 from just 18 in fy 16. if you see till today you know so obviously grand vitara is dead to come on the roads right so till today obviously you know maruti is struggling in 10 to 20 lakh segments you know which is obviously uh a big big pie of the total auto market today so so i think uh right now there is no doubt you know that um uh

Maruti is struggling and that’s one of the reasons you know why they have been focusing on this segment you know primarily with their new launches like uh grand vitara or maybe the future launches like mtv which will be coming uh in in this segment thing is you know maruti was primarily in that subcompact suv segment with the brezza right so and but if you see

You know competitors like tata right they have an suv in every suv segment otherwise you know broadly if you see i think they are trying to you know rework on their suv strategy for india market and and i think the best part is that they have got support this time from toyota which is the largest selling vehicle company in the world since the consumer aspirations

Have gone up the consumer income levels have gone up uh you know uh and primarily you know the competitors are also giving up on the you know uh fantastic products so i think now maruti is also trying uh to get themselves into the premium um not premium but yeah you know a market uh primarily is the market which is around 15 to 20 lakhs maruti has been a painfully

Late entrant to the suvs a segment which other car makers capitalized maruti shared in the uv segment has shrunk from 28 in fy 19 to 19 in fy22 mainly due to its fewer products in the space currently this category is dominated by hyundai and the likes of kia tata motors and mahindra mahindra have also gained significant share on their suva models on top of this

Maruti has seen a 25 decline in the market for hatchbacks in the last four years this category was most affected by rising costs but rc bhargava is not a man known for quitting easily the 88 year old chairman of maruti said the company will not walk away but fight to get back its market share while retaining its code base of appealing to smaller cities and rural

Areas the company has launched or lined up multiple premium models in the suv segment for urban india in the non-suv space of hatchbacks and sedans the company is planning to bring new features and technology in the non-suv segment maruti still has significant market share of 65 percent in the entry-level suv segment its share is 20 the company has only recently

Ventured into the mid suv segment with the launch of grand vitara hyundai creta and kia celtos currently lead the mid suv segment maruti is still a marginal player in the mid-size plus premium segment with just a market share of four percent as of fi22 however the demand for its new suv offerings is encouraging maruti suzuki has an order book of 130 000 units of

The brezza and 43 of it is for top end variant for vitara it has received three bookings of 57 000. demand for top variance is likely to increase the average selling price for the car maker and that note let us hear from ravi bhatia an auto expert from j2 dynamics so lexa started initially in any company when you have two channels it’s very difficult to serve the

Two channels with products constantly feed the new channel with the product i think maruti is getting its act together in a very short time of you know this lexa strategy they already have 23 share of the 10 to 15 like rupee car market okay so overall their their average weighted price or their share is higher because they’re also in the entry-level car market which

Can they continue to dominate but i think the strategy is beginning to take good shape and if if recent lunches are any indication i would say maruti uh pushing far aggressively into this premiums uh higher value car segment if we take the august sales marthy’s utility vehicle portfolio was up nearly 16 well the mini and compact segments declined 11 according to mk

Research sales will likely improve in the coming quarters with the start of deliveries of vitara and ramp up in production of existing models meanwhile analysts at kotak institutional equities research believe that maruti may face challenges to make a turnaround in the suv segment and regain market share due to its lagging performance on the severe competition that

Exists interestingly in electric vehicles another segment which is fast growing maruti is still cautious and is focusing on hybrid technologies however in collaboration with toyota for ev technologies maruti said it will launch the first range of evs in fy25 despite the challenges maruti is still a trusted brand for the common man given its strength in distribution and

Dealership network it can always up the game in the higher end segment recent launches on the upcoming product mix is a testament to that fact thank you if you like this video share it and subscribe to business standard for more news views and insights log on to do also follow us on youtube twitter facebook instagram telegram and linkedin thank you

Transcribed from video
Is Maruti's attempt to become a premium brand succeeding? By Business Standard

Related Post