Maruti Suzuki, the market leader in the Indian auto sector, says that despite being number one, it's got the SUV segment –– a niche in which it lagged in the past –– in its crosshairs now as it aspires to dominate that category.
Shashank Srivastava executive director of Maruti Suzuki says that the carmaker's market share is 65% in the non-SUV space. "That is fairly good," he notes, adding that in hatches they have over 73% market share, in Vans 95% market share, in MPVs 50% market share, and in sedans around 46% share. “However, when you combine our market share with SUVs, our market share falls to 42% from 65%. Why is that so? It's because the SUV space is now 45% of the entire passenger market," he says.
Back in 2016 while players such as Ford, Hyundai, and others were ramping up on SUV rollouts, Maruti analysed its footprint in the segment and realised that it only had one competitive front-runner - the Brezza. It had one product in a market where there were as many as 45 different SUV models made by others, Srivastava notes. Since its launch, Brezza has churned out robust sales, even leading its segment. But the moral of the story is that Maruti needs many more products.
"You can only get so far with one product. Clearly, you need to bolster your portfolio itself while you expand your market share," Srivastava says. After the Brezza, the company launched its larger apex SUV Grand Vitara last year. Recently it launched its rugged all-roader the Jimny and before that, a compact city SUV model called the Fronx.
Now that Maruti has four SUVs, Srivastava believes it’s a portfolio that is strong enough to boost overall numbers and get closer to the number one position in the SUV race.
Analysts say that tackling how SUVs evolve is no easy feat for any OEM. Suraj Ghosh an auto analyst formerly with IHS Automotive says that "The SUV space is witnessing tremendous growth and the trajectory is expected to continue in the immediate and mid-terms. So, for any carmaker, it becomes key that they have a good product lineup ready with new differentiating features."
Ghosh adds that the SUV definition that prevails in India is quite vague. So, carmakers get a lot of room to play around and get “SUV” numbers artificially inflated. "Maruti has been a slow mover in the SUV space. They have the Brezza in the compact-SUV segment and the Grand Vitara to compete in the mid-SUV segment. Both are doing well but in general, the brand Suzuki lacks the aspirational value and that’s a challenge Suzuki has to overcome to really see expansion in this space," Ghosh says, adding that the newly launched Jimny will be an exciting addition to Suzuki’s portfolio given its legacy and global popularity, but more will be needed to climb to the top of the SUV mountain.
“It’s expected that the Toyota-Suzuki partnership will enable Suzuki to bring in more SUVs and maybe the future EV portfolio could even be driven by SUVs," Ghosh said.
How subsegments influence products
One area which may work in Maruti’s favour is the emergence of sub-segments. Srivastava says that “We had the hatch segment earlier with the Maruti 800, and whether you were a government official or a businessman, a young entrepreneur or family man, everybody had the Maruti 800, because the segment size was small, and there was no other product. As it expanded, we saw the emergence of different subcategories in the hatch segment,” he says. “We introduced the Zen, then the Swift which was for individual performance oriented consumers, the Ritz which was a family larger spaced hatch, the WagonR, the tall, boyish, more practical car, and then the premium hatches like the Baleno, and so on.”
His point is that as the market grew, one saw the emergence of sub-segments in MPVs. “The category was earlier on the large Innovas which came in the year 1999-2000. But then we saw the emergence of midsize MPVs also like the Ertiga, or the Renault Triber,” Srivastava says.
Similarly, SUVs, earlier were only about large vehicles such as the Tata Safari or Mahindra Bolero and Scorpio. “Then we saw the emergence of compact SUVs, the small SUVs, four metre, mid SUVs, premium SUVs, and the compact SUV market kept on growing. So, it was about 4% or 5% of the market in 2016. Now it's the largest segment, that has been driven largely by Brezza and later on by the entry of such products as Kia Sonet, Hyundai Venue, Tata Punch, Tata Nexon, Mahindra XUV300,” Srivastava says.
Once these sub-segments become large, new segments emerge but where does that leave Maruti with sedans?
“The sedan segment which was about 23-24% of the market, in 2015-16, was at its peak. It is now under 10% of the market. So it has really come down. It looks like 10% for the last one and a half years. It's in that range. Annually volumes had touched six and a half lakh units and today it is about four lakhs,” Srivastava says. “So that is one trend which is a global trend.”
The mid-size sedans, where the Honda City, the Maruti Ciaz, and the Hyundai Verna play are at a total of one lakh units he says. “So you have about eight vehicles in this segment catering to one lakh volumes, which is low volume per brand. It may not be feasible to invest huge resources in developing products in this category. But in the entry sedan category, which is that Dzire, Honda Amaze that category has volumes of three lakh units which is still substantial.”
Sedans may not disappear but will stay flat for midsize cars. “The entry sedan is more optimistic, so we have to keep watching that segment,” Srivastava said.
Ultimately Maruti has defined purchasing criteria for its car buyers to include price, fuel efficiency, and value for money. That’s shifting according to Maruti. “Now you find the cues of design, performance, are becoming very important and reflected in our philosophy, whether it's the new Baleno, and the Brezza, or the new Fronx, the Ertiga, XL6 and it will be so going forward also because ultimately we are just following what consumers require,” Srivastava said.
