New Delhi: Maruti Udyog Ltd, which makes half the cars sold in the country, hopes the launch of its SX4 sedan will help shed its image as a maker of small, boring, fuel-efficient cars even as it seeks to boost its market share in this segment.
“Without losing our core competence of a small-car maker, gradually we are moving (towards big cars),” said Jagdish Khattar, managing director, Maruti. “We want to be an important player in this segment.”
The company, which is the leader in the small-car segment, which accounts for around seven of every 10 cars sold in the country, is No. 4 in the mid-size segment, lagging newer rivals such as Honda Siel Cars India Ltd and Ford India Pvt. Ltd. In 2006-07, it had a 15% share in this segment with two cars—the more than a decade-old Esteem and the Baleno, which was withdrawn from the market in December. The SX4, which is meant to be a replacement for the latter, will be launched in May.
“Suzuki (Maruti’s parent) is globally associated with small cars,” said Kalpesh Parekh, head of institutional sales at broking firm ASK Raymond James & Associates. “Whenever they launched a sedan, people didn’t take them seriously.”
Maruti’s earlier attempt to position the Baleno as a premium sedan didn’t take off as expected. When it launched the Baleno in 2000, Maruti initially priced the vehicle at Rs8 lakh. But sales of the vehicle took off only when the company cut prices by as much as 27% to Rs5.8 lakh.
“To compete in this segment, Maruti needs to transform into an aspirational brand,” said Manish Mathur, a principal at consulting firm AT Kearney India, who consults on the automotive sector. “One way, perhaps, is to have a different brand like Toyota and Lexus.”
Still, Maruti believes that its changing brand image—with the launch of zippier cars such as the Swift and the Zen Estilo—and a large customer base in the small-car segment, where it is the leader with 62.5% market share, will help it in the big-car segments as more customers seek to upgrade their vehicles with rising incomes. “We have a base of A and B segment (small-car) customers,” said Khattar. “These people will upgrade and if we give them an option, they’ll come here.”