Maruti’s Shift in Segment May Shake Indian Auto Market

New Delhi: More than a decade ago, when Tata Motors unveiled plans to build and launch a “popular car”, the Nano, an affordable small car in India, it marked a turning point in “the Indian history”. It was clear that India’s new economic powerhouse would rely on the country’s demographic dividend, a rapidly growing consumer market of not-so-wealthy Indians.

The small car was a winner – delivering volume to the automaker and serving consumers exactly what they wanted. Reigning automotive market leader Maruti Suzuki had established its dominance through a proliferation of affordable small cars beginning with the Maruti 800, Zen, Alto, WagonR and several others over the decades. Analysts predicted that the market could only grow and that India’s position as a “small automotive country” would endure.

Just fourteen years later, the trend has changed dramatically, with the SUV or sport utility vehicle becoming the car of choice among consumer categories and geographies and manufacturers for which they represent juicy market share and commercial growth. . Indeed, SUVs are the fastest growing segment of the passenger vehicle industry.

The biggest claim for the big change came from Maruti Suzuki. The Economic Times has reported that the undisputed industry leader has set its sights on the top SUV spot, a segment where it isn’t even in contention for second position yet.

Maruti has a market share of nearly half to 97% in all other passenger vehicle segments. In SUVs, its market share is 12%, but Maruti has set a growth target and is aiming for pole position in the SUV race over the next 12 to 18 months.

The company’s premium car models include Ciaz and SUVs such as the A-Cross and XL-6, all sold through its premium Nexa dealerships. (Compared to Alto, Swift, Dzire and other cars, as well as the Brezza SUV, which are sold through traditional dealerships called Arena.)

Plans are underway for new SUV launches from the Maruti stable. These may include the Jimny, the Baleno Crossover and a new Brezza, according to The Economic Times report. The launches are expected to deliver up to a quarter of a million fresh sales units per year to help Maruti double its market share. Component suppliers and resellers are already gearing up to handle the volumes, it seems.

What does Maruti’s big shift in strategy mean for rivals like Hyundai, Kia, Tata Motors and Mahindra & Mahindra? It is an alarm signal.

Japanese companies have a reputation for manufacturing and being able to turn adversity into advantage. Maruti, the alleged sleeping giant, once awakened, may trigger industry tremors with new models, as well as the depth, breadth and breadth of its dealer networks and sales centers across the country. Maruti’s portfolio, while designed to be economical, practical and low-maintenance, has been steadily building over the years with cars “gradually approaching the top of the range”. Its range of Nexa-badged cars have designs and features typically seen in more expensive vehicles.

It is inevitable that the industry prepares for fierce competition. If that makes the pie bigger, which it more than likely does, that can only be good news for the whole industry. Because if Maruti’s track record is any indicator, then its three new SUVs (and possibly many more on the way that have yet to be announced) would boost the leader’s market share, volumes and revenues. of the market and would also trigger a new run. among car manufacturers. A race to launch new SUV models that cater to the complex and highly segmented demographics of Indian car buyers.

There are still a few years to go before India transforms from ‘small car nation’ to ‘SUV nation’, but it’s a question of when; not whether or not – that’s what Maruti is preparing to focus on the SUV segment.

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