Maruti Aims to Increase its Market Share in Mid-Size SUV

By siliconindia  |  Friday, 14 August 2020, 10:58:34 AM IST

Maruti Aims to Increase its Market Share in Mid-Size SUV

Maruti Suzuki India Ltd aims to increase its market share in the lucrative sport utility vehicle (SUV) segment by repositioning its crossover vehicle, the S-Cross, as a mid-size SUV and pushing the petrol variant of entry level SUV, the Vitara Brezza. This strategy is focused on enhancing profitability and operating margins following the economic disruption caused by the Covid-19 pandemic. This disruption in fact led to vehicle sales plummeting in the past few months, thereby affecting the bottom lines of automobile manufacturers.

The SUV has been the fastest growing segment in the domestic market with a CAGR of 13 percent over the last five years. Consequently, the share of such vehicles as part of the overall passenger vehicle sales has grown to 28-29 percent at the end of FY20 from just 13-14 percent in FY18. The entry and mid-size sub-segments within the SUV segment have proven to be the most lucrative due to increasing demand from urban customers. However, Maruti couldn’t generate as much volumes in the mid-size SUV segment as its closest rival Hyundai is leading the segment with Creta. The three vehicles together have wholesale figures in the range of 15,000-20,000 units a month despite the current economic slowdown.

Increased competition in entry-level SUVs with the advent of Hyundai’s Venue and the imminent entry of Kia’s Sonet, Toyota’s Urban Cruiser and Nissan’s Magnite is likely to put further pressure on Maruti’s volumes in this segment. With the advent of new S-Cross, the company is hopeful to release better volumes than the previous version, which used to sell around 3,000-3,500 units a month.

“If you look at the B (SUV) segment, then our market share is 24-25 percent compared to 66 percent in hatches, more than 50 percent in sedans and more than 90 percent in C (vans) segment. So, it is in this category that our share is less than 50 percent. We would look at improving our share in this segment,” says Srivastava.

After the launch of the new Creta, Hyundai has eclipsed Maruti to the position of the biggest SUV maker in the domestic market in the May-July period. “We believe Maruti faces headwinds in maintaining its market share as customer preference continues to rotate towards utility vehicles (no visible downtrading in sales) amid rising competition. Given high expectations, we worry about the sustenance of current stratospheric valuations,” assert analysts at ICICI Securities.

“They (analysts) say this because the market share is less than 50 percent in mid-size SUVs. We are also the market leader in the entry-level SUVs. It’s in the mid-SUV segment that it becomes a challenge. In the entry-level SUVs – Brezza even today is the market leader in the segment even in the last three to four months,” says Srivastava.

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