Capacity constraints at Maruti Suzuki weigh on Brezza, S-Cross sales
2 min read . Updated: 15 Jun 2018, 01:21 PM IST
PremiumIn May, Maruti Suzuki's compact SUV sales rose 13.36% to 25,629 units, but these figures are nowhere close to the segment's historical 20%-plus growth
Mumbai: Maruti Suzuki Ltd’s slowing growth in the compact utility vehicle segment flows primarily from capacity constraints in the production of Vitara Brezza that dominates the segment, a person aware of the matter said.
According to data from the Society of Indian Automobile Manufacturers, Maruti Suzuki has been losing steam in the sub-4 metre UV category (commonly called the compact utility vehicle segment) since April, when the automaker posted flat growth in sales. The Vitara Brezza is the largest selling model in this segment.
In May, Maruti Suzuki’s sales in this category rose 13.36% from a year ago to 25,629 units, but these figures are nowhere close to the segment’s historical 20%-plus growth. Apart from Vitara Brezza, Maruti Suzuki also sells the S-Cross, Ertiga and Gypsy models in the segment. In April, Maruti Suzuki’s sales in the segment rose marginally to 20,804 units over 20,638 a year ago. Meanwhile, rivals have edged ahead.
According to the person cited earlier, who spoke on condition of anonymity, introduction of the third-generation Swift hatchback has taken away production capacity at Maruti Suzuki’s Hansalpur plant in Gujarat from the Brezza. Other models in the category, namely the Gypsy, S-Cross and Ertiga, are unlikely to have been affected since they are manufactured at the Gurugram plant, this person added.
Maruti Suzuki did not respond to emailed queries till press time.
In a statement on Wednesday, Maruti Suzuki claimed the third-generation Swift is India’s fastest-selling car, clocking 100,000 units in 145 days.
On the back of several facelifts, including the Swift, and a low base of the previous year owing to the goods and service tax, passenger car sales in May advanced at 19.6%, the fastest monthly growth in at least a year.
The Swift has been one of the most popular cars in India, selling 1.89 million units since launch in 2005. With the latest facelift, the peppy hatchback is clawing its way back to the top, after being sidelined by Maruti Suzuki’s own premium hatchback Baleno and Hyundai Motor India Ltd’s i10 Grand and i20 Elite models.
Analysts believe the Vitara Brezza is now unlikely to beat the market as it is reaching a “stable" run rate at the end of its model life cycle. According to an analyst, who spoke on condition of anonymity, the model will need much more than an automatic transmission variant launched in early May.
“The Brezza will find it difficult to grow the segment now, since it is well into its second year. As competition heats up in the segment, Maruti Suzuki can maintain its share but will probably not be able to grow it", said Jigar Shah, chief executive and head of research at brokerage firm Maybank Kim Eng Securities India Pvt. Ltd.
However, the preference for compact SUVs will continue, said both analysts, adding that capacity expansion, of 100,000 units at Hansalpur this fiscal, which also produces the Baleno, will certainly help matters. They do not see a major impact on Maruti Suzuki’s topline or margin growth owing to constrained capacity in the short term.
