Is Maruti waking up to the Hyundai challenge?

Just like Lord Hanuman transported Mount Meru for the Sanjeevani plant for Lakshamana, Indians believe a Maruti will ferry them safely across all obstacles to their destination. My neighbour in the building has owned a Maruti 800 for 15 years. My building has developed cracks and could collapse any day, but the Maruti is still going strong and steady. But what’s super strange is how its most famous models were mostly with no airbags, EVs, sunroofs or automatic transmission system, Maruti Suzuki could hold a market share of 58.06% until 2020! Well, sure, it’s losing its market share now, but what’s the deal with people liking it so much without much innovation?🤔

In the 90s, only 1.6% of Indians were car owners but now, the number has grown to 8%. Sure it sounds too less with the traffic situation in Delhi, Bangalore and Mumbai, but only 1 out of 12 households in India has a car! 🤯 And guess what? Almost half of these cars are Marutis. Nevertheless, our article's hero has been witnessing a significant reduction to 41% market share. As per the industry experts, this downslide is due to Maruti’s decision to stop selling diesel cars which reduced the total number of cars sold by almost 250,000 units. But is it really the reason? Or not catching up to the Hyundai challenge has finally pushed Maruti to reconsider its stance towards modern automobile features?

But again, Maruti Suzuki dominates the Indian automobile market even with this reduced market share and its cars are ubiquitous on Indian roads. The brand is like a cup of filter coffee to a South Indian who craves it even after sampling all the variety at Starbucks. 

When a single company’s share of the most selling cars in the automobile industry was analysed, Maruti Suzuki had 10 of the 15 top-selling models in India. Out of the 13 passenger vehicle segments, Maruti Suzuki had 8 top-selling passenger vehicles.

The Dada (and Dadaji!) of the Automobile Market

 Like Colgate has become synonymous with toothpaste, Maruti is synonymous with cars in India. Here is why Maruti Suzuki still continues to dominate the Indian automobile market after its introduction:

Economical proposition (“Tumhare paas kya hai?” “Mere paas MAruti hai!”)

India’s population is heterogeneous in income, needs, wants, and way of life. Maruti Suzuki has positioned itself in the price-sensitive, economic passenger car segment. Its target market is the middle and upper-middle-class, for whom buying a car is a luxury, and a luxury car ain’t a necessity. They are guided by the vehicle’s price tag, even if it does not include all the bells and whistles. 

Their demand for a comfortable car in the lower price ranges is largely elastic, meaning their demand increases with lower prices. This has enabled Maruti Suzuki to control passenger vehicles by sheer volume. 

Indians are so addicted to Maruti that they overlook the fact that its models can be smashed into a papad by a truck, their noses might get broken, and they might fly through windshields.Well as long as the car fits the budget. 🥲

Diversity of vehicle choices

Maruti Suzuki provides many choices with a wide range in each vehicle segment, especially in the lower price segments. It overwhelms the customer with its choice of vehicles. No other car manufacturer comes close to Maruti Suzuki when providing freedom of selection to consumers in the limited price range is in question. Whether it is an entry hatchback, compact hatchback, premium hatchback, compact sedan, premium sedan, luxury sedan, compact SUV, mid SUV, premium SUV, an Omni or a van, Maruti has multiple offerings which enable it to retain the leadership.

Its 96 types of cars across vehicle segments lead the Indian automobile market, with only Hyundai coming a close second with 90 varieties. Our thinking brain is so overwhelmed by the choice that our car can be a Maruti or nothing else.

Maintenance and good connectivity to service centres:  

Maruti Suzuki leaves competitors behind with its 4,240 service centres. A legit tum jahan hum wahan vibe.  The number of Maruti Suzuki’s service centres is more than all other car manufacturers' centres combined. In addition, there are 1398 support vehicles which work in the areas with a lack of support centres. Furthermore, 765 quick response vehicles provide road assistance or roadside repairs.  

Backward integration with Suzuki Powertrain India Ltd

Suzuki Powertrain India Limited manufactures diesel engines. Through backward integration with this company, Maruti Suzuki had consolidated the business of manufacturing diesel engines and reaped economies of scale. The synergies between the two companies and the access to a larger financial base enabled the company to produce diesel engines economically. #Jugaad

Maruti Suzuki’s integrated production process allowed it to compete better in the diesel car segment. This increased sale of diesel cars enabled Maruti to command a market share of 25.2%. On top of that, the company followed a differentiated pricing strategy that increased diesel car prices to encourage petrol car sales. This strategy facilitated better capacity utilisation of the production facilities of all car variants. Smart, no?

BUT, Maruti believes that the next phase of emission norms in 2023 is going to be tough on the diesel car segment, which is ultimately going to increase the car prices. It will lose its advantageous price negotiating power against the petrol cars and these change of events are already in motion. Maruti has already discontinued diesel models after the BS-VI emission norms were put forward. God knows they fear the day when they lose their edge and their dominance be lost for forever.

Maruti is a favourite of taxi drivers, Bollywood heroes, and kidnappers alike.

Why is it then, that Maruti is losing market share?

In recent years, Maruti Suzuki has become a sluggish giant. The Colgate of the market is on the verge of becoming the Nokia of the market. Since the company has been so fixated on offering models at reduced rates, it has been resisting the features the millennials want. Such a grown-up thing to do!

When a major part of the Indian consumer class is migrating to SUVs, Maruti has been backward in launching many variants in this particular product segment. Today’s millennial and Gen-Z customers are becoming more affluent, demanding newer models with a sleeker design, superior engineering and product features. 

Other car manufacturers, especially the Tatas and the Mahindras, have been more proactive. The advent of electric cars will sound the death knell for fuel-powered vehicles for cars to be environmentally sustainable.

Why do you fear seatbelts, child? 

In January this year, the government introduced a draft proposal that mandates 6 airbags in all passenger cars that will be manufactured from October 2023. Maruti had a typical response that you would expect from a profit-greedy businessman - that it is going to cost more and hurt their sales by driving out a chunk of potential buyers. The cost of adding 4 seatbelts is approximately ₹17,600. And some models may even require re-modelling. But hey, safety ain’t their first concern. 

So, now you know? Sales of cars>>>>>Cost of your life. 🤷‍♀️

Migration to the west

There has been a quantum leap in car technology, and the Tatas, Mahindras and Hyundais are hungry for market share. They have also attracted FDI into their company, which gives a head start to their companies. In the fiscal year 2021-22, the Indian automobile industry attracted an FDI of 5.96 billion dollars compared to 1.64 in the previous year.

If Maruti Suzuki wants to maintain its market leadership, it must reinvent itself and its product strategy in line with changing times.

No Electric Love in sight

Between 2020 and 2027, the EV market in India is expected to grow at 44% CAGR, and annual sales by 2027 are projected to reach 6.34 million units. Now that, is some number!

But Maruti is falling way behind in this. According to reports, Maruti’s first EV will hit the roads by 2025. Most of the brands, however, have already introduced various models of EVs, with Tata and Hyundai already taking the lead on this with budget-friendly models such as Tata Tigor EV, Tata Nexon EV, Tata Xpres-T EV, and Hyundai Kona. 

The Bottom Line

The urban Indian consumer is no longer motivated by fuel efficiency and an economical vehicle. Most young professionals today are aspirational for a higher living standard, including purchasing a premium car. Maruti’s limited product launches, outdated design features, lack of dominance in the SUV segment, outdated technology, lacking features like sunroofs in most models, premium sound system, air filters, anti-skid braking systems, safety features like airbags, chip shortage, scarcity of diesel model variants, non-introduction of electric cars, rising fuel prices will all affect Maruti Suzuki’s market share. We see it, Maruti; do you? 

Maruti has been going the extra mile with its branding, new NEXA showrooms with an array of new premium cars in Maruti’s stable, and putting together its new portfolio in retail packaging that appeals to discerning customers. The company’s traditional stronghold image of making affordable, low-maintenance cars - and readily available service facilities make it still a company that produces value-for-money automobile offerings, which prevents an extensive erosion of its market share.