Despite clocking a growth of 20.7 per cent in unit sales at the end of FY23, the country’s largest carmaker Maruti Suzuki India Limited somewhat missed out on the party. As ‘animal spirits’ returned to the Indian economy, or at least to car buyers, MSIL’s growth was below the stunning 26.7 per cent growth of the overall passenger vehicle market. It means that the company’s market share fell to lows unseen since the earliest days of the company to just 41.3 per cent, according to data provided by the Society of Indian Automobile Manufacturers.
Sure, part of this drop was due to the semiconductor shortage, which you might have heard of if you have walked into a car showroom lately. MSIL’s executive director of sales and marketing, Shashank Srivastava, says that the company lost “170,000 potential sales” due to the semiconductor and CNG kit shortage. But he believes that the impact of these shortages will be completely mitigated by the time the festive season begins in the second quarter of this financial year.
However, Maruti Suzuki’s management says that the ‘true’ reason for their sales decline was the company’s limited presence in the burgeoning Sports Utility Vehicle (SUV) segment. Unsurprisingly, MSIL has been on a tear launching SUVs to make up for its losses. Not only have they updated the Brezza, in the past six months alone, they have launched the Grand Vitara, Fronx and Jimny.
“Our market share in the SUV segment has gone from 12.3 per cent last fiscal to 20 per cent right now, and we want to achieve 24-25 per cent share in this segment”, Srivastava added.
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Invicto against domestic SUVs
The company’s management clearly feels that they have lost out to domestic manufacturers Tata Motors, which grew by about 46 per cent in sales last year, and Mahindra, which had an even more impressive 59 per cent growth. Both these manufacturers were bolstered tremendously by their SUV portfolio. But as Srivastava points out MSIL also has bigger dreams. As part of the global tie-up 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) have been sharing vehicles. You can see that with Baleno and Glanza and even the Urban Cruiser Hyryder and Grand Vitara. But Maruti Suzuki Invicto, a version of Toyota Innova Hycross to be unveiled early next month, is a step-up in that collaboration.
This leads to a rather obvious question. Can a vehicle wearing the Suzuki ‘S’ badge be sold for Rs 30 lakh or more in India? After all, despite the SUV push by Maruti Suzuki, the top-selling cars in May 2023 were all Maruti-Suzuki hatchbacks—Baleno, Swift and Wagon R respectively. These were followed by Hyundai Creta, Tata Nexon and Brezza, all of which are SUVs.
“We have a 60 per cent share of the sub-Rs 10 lakh market for cars in India. But what I find interesting is that in the Rs 15-20 lakh market, our share has only grown of late, from 26 per cent last fiscal to over 30 per cent now,” Srivastava tells me.
Nexa push and annual growth
Part of the reason why MSIL climbed up the ‘desirability’ charts was the establishment of its Nexa dealership network. Over a decade ago when MSIL launched the imported Grand Vitara and Kizashi, which were extremely well-regarded by those who drove them, the company’s mass-market brand image at the time meant that selling them was a challenge. Nexa was introduced to take Maruti Suzuki upmarket and it has been a roaring success, according to Srivastava. The executive director claims that it had the ‘third-highest volume of sales after Maruti-Suzuki Arena (their other network for more affordable vehicles) and one rival (Hyundai).
“We want to make Nexa the second-largest sales network in India after Arena,” he says of his ambition to not only help MSIL recover lost market share but also to trample the competition. “People did not believe that we could sell a car for more than Rs 20 lakh. But the success of the Grand Vitara has vindicated us, and I’m sure we will manage just fine with the Invicto,” adds Srivastava.
However, despite the tremendous sales growth (13 per cent) in the first two months of the new financial year compared to last year, Srivastava is a bit muted about annual growth. He says, “Our sales in June last year were off the charts, and I doubt we can maintain that pace as an industry. I believe that growth for this financial year will be between 5-7 per cent, with annual sales touching 4.05 – 4.15 million vehicles’.
One reason for his conservatism is that events of the past couple of 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 impacted and thus food inflation rises? I think the Reserve Bank of India has done a great job managing inflation so far and once we know how the monsoons are progressing and there is geopolitical stability, maybe they will do something about growth rates,” he says.
Many have predicted that Maruti Suzuki will not survive. First, it was the foreign onslaught. But the carmaker saw off Ford and General Motors. And now, it is the SUVs from the domestic carmakers posing competition. Will the Maruti Suzuki Invicto prove that the company is truly Invictus?
@kushanmitra is an automotive journalist based in New Delhi. Views are personal.
(Edited by Ratan Priya)