New Delhi: Maruti Suzuki India Ltd entered the multi-utility vehicle (MUV) segment on Thursday with the Ertiga, pitched against similar vehicles made by rivals such as Mahindra and Mahindra Ltd, Tata Motors Ltd and Toyota Kirloskar Motor Pvt. Ltd, as it seeks to regain market share amid a slowdown in sales.

The global launch of the car, designed specifically for the Indian market, took place in New Delhi on Thursday.

New offering: Maruti Suzuki managing director and chief executive S. Nakanishi at Ertiga’s launch on Thursday.(AFP)

The sales of passenger vehicles —cars, utility vehicles and vans—slowed to at least 5% in the last fiscal from 30% growth in fiscal 2011. Maruti’s share of the passenger vehicles market slipped to 38% in the last fiscal from 45% in the year before.

Starting at 5.89 lakh (ex-showroom, Delhi), the petrol variant is expected to target premium hatchbacks such as Honda Siel Cars India Ltd’s Jazz and Hyundai Motor India Ltd’s i20, according to analysts. The diesel variant, which starts at 7.3 lakh, will compete with mid-sized sedans such as Hyundai’s Fluidic Verna and Honda’s City.

“It is a vehicle that will target customers right from premium hatch buyers to sedan customers," said Nikhil Deshpande, research analyst, Pinc Research, a Mumbai-based brokerage firm. “The pricing has been spot on, which would force a lot of customers to look at it."

The pricing of the diesel variants may be slightly off the mark, said an analyst with a leading brokerage firm who did not want to be named.

“The lower-end of the diesel variant is neck and neck with Mahindra’s Xylo, while Xylo has a much higher engine displacement," the analyst said. “So the question is whose market will they take away?"

Xylo sells at least 2,200 units a month while Tata Motors’ Venture van, which has a 1.4-litre engine and is priced below 5 lakh, sells at least 500 units a month. The Toyota Innova, which has a 2.5-litre diesel engine, sells 5,000 units a month.

While the company declined to provide any targets, an analyst expects Maruti to sell 5,000 units a month.

“Ertiga will score over others such as Innova and Xylo in terms of fuel efficiency," said Aniket Mhatre, equity analyst, Standard Chartered Securities. “You might not get the comfort of Innova, but by keeping the top-end variant of diesel under 9 lakh, the company has provided an option to its own customers who want to graduate from Maruti cars."

The company, which saw its market share slipping below 40% in the last fiscal, expects growth to come from the MUV segment, managing director and chief executive Shinzo Nakanishi said on Thursday.

“Utility vehicles have demonstrated a CAGR (compounded annual growth rate) of 20% over the last three years. We strongly believe that it will continue to grow in the same fashion over the next few years," Nakanishi said. “Ertiga holds big significance for the Suzuki family. This is designed with a special focus on India. There are a number of Indian families who compromise on space. Ertiga is designed for such customers."

The demand for utility vehicles has also prompted other auto makers to introduce more models in the segment. Ford Motor Co. plans to introduce its EcoSport model later this year, while General Motor Co. will start selling two utility vehicles from its partner SAIC Motor Corp.’s portfolio.

Maruti managing executive officer Mayank Pareek said small cars will continue to be a focus area for the company as that will form the bulk of the country’s market. Still, the company will launch products in new categories to expand its market share.

Along with its component suppliers, Maruti spent 410 crore to develop the Ertiga. The car, conceived three years ago, has been a joint effort of engineers of Maruti Suzuki and Suzuki Motor Corp.

The company has posted at least 200 engineers at Suzuki’s Hamamatsu headquarters in Japan to work on a variety of products for emerging markets, said I.V. Rao, Maruti’s managing executive officer, engineering.

The company also said on Thursday that it has started exporting completely knocked-down kits of the Ertiga to Indonesia and will look to export the car to a few other South-East Asian countries