Home / Companies / Maruti Suzuki plans to drive into MUV segment

New Delhi: Not content with its leadership position in the small car market, Maruti Suzuki India Ltd plans to expand its product range to other segments, including multi-utility vehicles (MUVs), as it looks towards its next phase of growth and seeks to tackle increasing competition.

At the 10th Auto Expo, India’s biggest car maker unveiled new models on Tuesday and laid out a road map for capacity expansion.

Designed in India: Maruti Suzuki managing director Shinzo Nakanishi unveils the concept version of an MUV that is capable of carrying at least seven people, at the 10th Auto Expo in New Delhi on Tuesday. Ramesh Pathania / Mint

With the Indian car market forecast to double to three million units by 2015, Maruti Suzuki plans to raise its capacity to 1.5 million units to defend its leadership position of about 50% of India’s passenger car market. Most of the expansion would take place at the Manesar facility.

Nakanishi expects exports to stay flat at about 150,000 units per year by 2015.

Car makers, including Toyota Motor Corp., Honda Motor Co. and General Motors Corp., are seeking to challenge Maruti Suzuki’s dominance and increase their share of the Indian market by introducing a slew of small car models, stepping up the pressure on the Indian auto maker to devise new strategies to power growth.

Maruti Suzuki unveiled the concept version of an MUV capable of carrying at least seven people. Named the R3, the MUV has been wholly designed by its research and development facilities in India.

With this, the company has plugged a crucial gap in its product portfolio and would be venturing into a segment that accounts for 13% of car sales in India. The R3 will be pitched against the Toyota Innova and the Mahindra Xylo—both runaway successes for their makers. MUV sales in India rose 40% to 91,782 units in the first eight months of this fiscal year.

Initial reactions to the R3 were positive. “It’s an excellent product for the Indian market, where you need to pack in a lot of people in very little space," said Paul Blokland, director of Segment Y, an automotive intelligence firm. “What’s important is this is the first time a car has been designed in India."

The firm hinted that the R3 would be put into mass production soon. “Typically it takes about 24 months to take a car from the concept stage to production," said I.V. Rao, managing executive officer (engineering) at Maruti Suzuki.

It also displayed the Kizashi sedan, which would mark its entry into the D-segment—generally defined as cars priced over Rs10 lakh. Sales are expected to begin by the end of calendar 2010, according to a company spokesperson.

To maintain its market share, the company plans to aggressively develop its marketing network as well as work on reducing the cost of producing cars. These cost savings could be passed on to customers, Nakanishi indicated.

The company is already working with vendors to reduce costs with the Alto hatchback and may pass these benefits on in the coming months. The Alto, India’s largest selling car, sells over 20,000 units a month.

Maruti Suzuki’s current stable of small cars would see models being refreshed at periodic intervals and new variants being added.

Still, Nakanishi admitted 2010 would be a tough year as the company would have to fight hard to defend its market share. “This is not going to be easy as there are many car makers coming in," he said.

Volkswagen AG (VW) plans to launch the Polo hatchback in March. Toyota expects the Etios, its small car unveiled on Monday, to hit the streets in December, while Honda is targeting 2011 for its small car launch.

A recent global partnership between VW and Suzuki Motor Corp. would take some time to play out in the Indian market, Nakanishi said.

Among the options that could potentially be looked at are contract manufacturing by Maruti Suzuki for the Volkswagen Group and making use of VW’s diesel technologies, he added.

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