Maruti wants to up its SUV game after Brezza’s success — that means taking on M&M, Hyundai and Kia head on
Maruti Suzukisaid that it has an overall market share of 48% – and the only deterrent from a higher market share is the SUV segment.
- The struggle is visible even though the company has marked a great performance with its entry level SUV offerings like Vitara Brezza.
- From Mahindra & Mahindra, to new players like Kia and
Hyundai, Maruti has enough competition even if it wants to up its game in the segment.
AdvertisementIndia’s largest carmaker Maruti Suzuki has a challenge – the company now has to scale up its efforts in the SUV segment and rise up to the competition from the likes of Mahindra & Mahindra, Hyundai, Kia and others.
In a recent conference call after its earnings, Maruti Suzuki said that it has an overall market share of 48% – and the only deterrent to a higher market share is the SUV (sport utility vehicle) segment. However, with the addition of Urban Cruiser and Glanza, its offerings under a partnership with Toyota, the market share is above 51%.
And this difference comes even though the company has marked a great performance with its entry level SUV offerings like Vitara Brezza.
“One of the constraints in our current market share is the SUV segment. In the entry SUV of course, we are the market leaders with Brezza. In the mid SUV segment, our market share is low. We have the S-Cross, which we recently launched with a new engine in August, but it has given us sub optimal numbers so far, which we intend to increase in the coming years,” said the management.
The UV segment made for 39.12% of total passenger vehicle sales in the financial year ended March 31, 2021.
The lack of SUVs in the premium or mid segment is causing Maruti to lose market share. Vitara Brezza and Ertiga are the only two vehicles that have kept the company afloat in the SUV segment. And the sales for the same have been declining in the last three years.
The management also said that as far as the overall product plan for the SUV segment is concerned, they know they have to act upon it. “We are cognizant of the fact and we are looking at this segment very very carefully and you’ll see some action there,” said the management without sharing further details.
SUV will bring greater margins as well
Bringing in more product offerings in the SUV segment could also potentially mean more revenue for Maruti Suzuki. “If you can build a SUV-ish [sic] like product, then it leads to localisation and a bigger cost advantage and definitely an opportunity exists there,” the company said during the call.
AdvertisementAshwin Patil, auto analyst at LKP Securities, told Business Insider that SUVs do bring a greater margin for companies. “SUVs do earn higher margins because their costing is higher and the variable costs are not much different from the lower end vehicles,” he said.
“They [Maruti Suzuki] will now be concentrating on the middle and premium level segments where they don’t have any significant presence. In the lower SUV segment, they have a good hold,” added Patil.
From M&M to Kia and Hyundai – Maruti will use its strengths to face competition
From Mahindra & Mahindra, to new players like Kia and Hyundai, Maruti has enough competition even if it wants to up its game in the segment. As per reports, one in three cars sold in India is a SUV.
The South Korean giant Kia already offers three fairly successful products – Seltos, Sonnet and Carnival -- and plans to strengthen its presence in India. Meanwhile, Hyundai Creta is a tough competitor to Maruti’s Brezza. For Hyundai, SUVs form 45.8% of its sales in India.
AdvertisementBut Patil believes that competition can’t hold Maruti back. “Maruti has always faced stiff competition, but it doesn’t mean they won’t be able to gain any market share. Maruti has got the network and dealerships across India, as well as a strong rural presence. Kia is a very new player, it will take some time for them to snatch market share from Maruti, while Mahindra & Mahindra is itself pulling up its socks in the SUV sector. Maruti’s brand in itself is its main driver. If Maruti comes with good models, they will combat the likes of Kia or Hyundai,” he told Business Insider.
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