It continues to be the monarch of the Indian car market with a near 50 per cent share, but Maruti Suzuki has been facing a wee bit of trouble in the entry-level segment, where its Alto and Wagon R models are the prime movers.
The company sold a little over 4.13 lakh units in the segment during FY17, its lowest in the last three years (4.25 lakh and 4.32 lakh in FY15 and FY16 respectively).
Its market share here dipped from 81 per cent in FY15 to 71 per cent in FY17, even though the overall segment grew at a CAGR of 5.5 per cent, reflecting an expansion in the market for entry-level cars.
One of the biggest disruptors here has been the Renault Kwid, which caught the fancy of customers in a big way. The Kwid has been averaging 8,000 units each month which is still way behind the Alto but has still helped grow the overall entry-level space.
While Maruti has been upgrading its entry-level cars with newer features such as auto gear shift technology, enhanced fuel efficiency and driver airbags, it has not brought out any new models in the segment for a while. “Customers give more weightage to new launches compared to upgrades or refreshed products,” says Abdul Majeed, Partner, PwC India. According to him, Kwid has been the only new entrant and it is therefore not surprising that it has gained market share. Yet, it is not as if its good run is guaranteed to continue either. “Kwid will find it difficult to hold on to the market share for long as a new product’s life-cycle is just about two years at the most now,” cautioned Majeed.
Hyundai also hitThe entry-level space, which comprises five-seat hatchbacks, also includes Hyundai’s Santro and Eon. Like Maruti, the Korean carmaker saw a sharp fall in this category over the last three years from a peak of 97,000-odd units in FY15 to a little over 59,000 units in FY17. In the process, its market share with the Santro (which has been phased out for a while now) and Eon has nearly halved from 18.5 per cent to around 10 per cent.
Both Maruti and Hyundai are focusing on a host of other product categories to keep in line with market preferences. For instance, the customer is now completely hooked on to SUVs and the success of the Vitara Brezza and Hyundai Creta indicates that the two companies have been quick to react to this change in preference.
And even as it may have lost a little ground in the entry-level space, Maruti has more than made up by achieving market leadership in the mid-sized sedan category with the Ciaz, while the Brezza has led the way in compact SUVs. Likewise, it is on top in the premium hatchback slot with Baleno while the S Cross heads premium crossovers.
“We have been on a journey of transformation in recent years. We challenged ourselves and entered new segments with new products like Ciaz, Brezza, S Cross and Baleno. In parallel, we have brought new technologies to our products and equipped six of our models with advanced safety, much ahead of regulations,” says RS Kalsi, Head of Marketing and Sales at Maruti Suzuki.