Shift of focus in Maruti segment could upend India’s auto market

New Delhi: More than a decade ago, when Tata Motors revealed its plans to build and launch a ‘people’s car’, the Nano, an affordable small car in India, it was a turning point in the ‘India Story’. It was clear that India’s new economic strength would depend on the country’s demographic dividend, a rapidly growing consumer market for non-wealthy Indians.

The small car was the winner – delivering large volumes to the manufacturer and serving customers exactly what they wanted. The automotive market leader, Maruti Suzuki, has proven its dominance through the proliferation of affordable compact cars starting with the Maruti 800, Zen, Alto, WagonR and many more over the decades. Analysts predicted that the market could only grow, and India’s position as a “small auto country” would continue.

Only fourteen years later, the trend has shifted sharply, with the SUV, or SUV, becoming the vehicle of choice across consumer categories, geographies and manufacturers representing a significant segment of market share and business growth. In fact, SUVs are the fastest growing segment of the passenger car industry.

The biggest confirmation of the great transformation came from Maruti Suzuki. The Economic Times reports that the undisputed industry leader has set his eyes on the top spot for SUVs, a segment where he’s not even in the second place account at the moment.

Maruti captures nearly half to 97% of the market share in all remaining passenger car segments. In SUVs, its market share is as low as 12% but Maruti has set itself a goal to grow this and aims to take center stage in SUV racing over the next 12-18 months.

The company’s premium car models include Ciaz and SUVs like the A-Cross and XL-6, all sold through premium Nexa dealerships. (Unlike the Alto, Swift, Dzire and other cars, as well as SUVs, the Brezza, which is sold through major dealerships called Arena.)

Plans are underway to launch new SUVs from the Maruti stable. These vehicles may include a new Jimny, Baleno crossover and Brezza, the Economic Times reports. The launches will provide up to a quarter of a million units of fresh sales annually to help Maruti double its market share. It is said that component suppliers and dealers are already preparing to deal with volumes.

What does the major shift in Maruti’s strategy mean for competitors such as Hyundai, Kia, Tata Motors, Mahindra and Mahindra? It’s a wake-up call.

Japanese companies have a reputation for manufacturing and the ability to turn adversity into an advantage. Maruti, the supposed sleeping giant, when awakened, could shake up the industry with new models, the depth, breadth and breadth of dealer networks and sales centers across the country. Although the Maruti portfolio is designed to be economical, practical and low-cost to maintain, it has been steadily built over the years with ‘close to first-class’ vehicles. The range of cars with the Nexa badge feature designs and features typically seen in higher-priced cars.

It is inevitable that the industry is set for stiff competition. If that makes the pie bigger, which is more likely, it could just be good news for the entire industry. Because if Maruti’s previous record is any indication, the three new SUVs (and possibly more on the road yet to be announced) will boost market share, volumes, and revenue for the market leader and also launch a new race amongst the automakers. A race to launch new SUV models that cater to the complex and highly segmented demography of Indian car buyers.

There are still a few more years before India transitions from a “small car country” to a “four-wheel drive country” but that is the question of when; Either way – that’s what Maruti is preparing to shift its focus to in the SUV segment.

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