Maruti moves up value chain, makes its presence felt in premium segment

The company cornered more than a fourth of the market for midsize passenger vehicles, priced between Rs 10 lakh and Rs 15 lakh, in the last fiscal year, and led the pack in this growing segment.

Maruti Suzuki launched nearly half a dozen models the past year in this segment, from the Grand Vitara to the Brezza and the XL6. Its market share in the space grew to 26.2% last fiscal year from a modest 7.3% in fiscal 2022. In the first two months (April-May) of fiscal 2024, its share increased further to 28.8%.

Korean rivals Hyundai and Kia trailed with market shares of 19% and 18%, respectively, in FY23, show industry estimates. Homegrown Mahindra & Mahindra came in next (15%), followed by Tata Motors (12.5%).

Launch of new vehicles in quick succession, a separate distribution strategy for premium cars leveraging the NEXA network, and an increase in average selling price of vehicles in the Indian market, enabled Maruti Suzuki to move up the value chain, while also retaining core buyers in the small-car segment.

“We are the market leader in the Rs 10-15 lakh segment and growing,” said Shashank Srivastava, senior executive director (marketing and sales) at Maruti Suzuki. “We are confident we must try to participate more in the premium market going ahead.”Demand for premium vehicles in the Indian market has been growing at a fast clip, trebling in the three years to March 2023. As many as 907,000 vehicles priced in the Rs 10-15 lakh range were sold in the last financial year, which is an increase of 77% over the previous fiscal year.Overall sales of passenger vehicles rose 27% in FY23. The Rs 10-15 lakh segment constituted 23% of the market, up from 16.7% the year before.

Maruti Suzuki is planning to launch more vehicles in the segment.

It will shortly commence sales of the Invicto, which will take on the likes of Kia Carnival, Toyota Hycross, MG Hector Plus and Mahindra XUV700. Bookings for the seven-seater will start June 19.

Srivastava said: “Indian buyers today are demanding more premium vehicles. While vehicles priced over Rs 10 lakh now comprise more than 40% of sales in the local market, those above Rs 20 lakh have grown to 5% in the last two years. There are special segments which are coming up for three-row vehicles and we are moving quickly to cater to these buyers.”

Vehicles priced above Rs 20 lakh accounted for 1% of sales in March 2021.

V Ramakrishnan, managing partner at consultancy firm Avanteum Advisors, said Maruti Suzuki has moved deftly to retain loyalists within the brand with a slew of new products. This has helped the company up share in sales of higher priced vehicles.

“There is no doubt they have done a very good job on the product front, be it with the Baleno which helped engage youngsters or the new Brezza and the Grand Vitara, which helped them capture customers upgrading from vehicles like the Swift,” he said. “But this premiumisation has to be also read in the context of where the market itself has moved. With these vehicles they are still largely covering the mass end of the SUV market,” Ramakrishnan added.