Maruti to replace low volume models in a year3 min read . Updated: 07 May 2013, 12:08 AM IST
Company aims to regain market share by introducing new cars to replace A-star, Estilo and its sedan SX4
New Delhi: Maruti Suzuki India Ltd, the country’s largest car maker, will introduce two new models in a year’s time to replace those that aren’t selling too well as it seeks to regain market share in the world’s second fastest growing automobile market.
The company had a 39% market share of the passenger vehicle market in the last fiscal year, almost the same as the 38% share it had the year before and well down from the 45% share it had in 2010-11.
The two people—one works for a Maruti Suzuki vendor and the other is a company executive—also said the firm plans to retire its sedan SX4 and replace it with a new model based on the same platform. Codenamed YL1, this car will seek to revive Maruti Suzuki’s fortunes in a segment where they have been flagging after the launches of Hyundai Motor India Ltd’s Verna and Honda Cars India Ltd’s City .
A company spokesperson declined comment on the future product strategy of the firm.
The new small car is especially important for Maruti Suzuki, which holds a 51% share in a segment that accounts for three of every four cars sold in India. Sales of small cars declined 9.64% in 2012-13, largely because of a slowing economy, and Maruti Suzuki’s own sales of small cars fell 5%.
India’s car market, which was in a tear for almost 3 years between 2011 and 2013, shrunk 6.69% to 1.89 million units in 2012-13 on the back of a slowing economy, rising inflation, and the high cost of financing a car. Analysts don’t expect 2013-14 to be much better. The company executive said Maruti Suzuki believes the only way to thrive in such a market is to take market share away from rivals.
The person who works for a Maruti vendor said the new sedan would hit Indian roads next May.
In the domestic market, sales of A-star and Estilo plunged 31% and 35.39% while SX4 sales declined 63% to 6,707 units, according to Fortune Equity Brokers (India) Ltd, a Mumbai-based brokerage firm.
Maruti Suzuki won’t have it easy in the entry-level sedan segment, said an expert.
“While (Maruti’s) Esteem was a success as an entry-level sedan, the company’s subsequent attempts to make inroads through Baleno and SX4 didn’t make the cut," said Pradeep Saxena, executive director, TNS Automotive, a research and consulting firm. Saxena said while Estilo could not live up to the image created by the older (and iconic) Zen, Indian customers could not relate the design of A-star.
Demand for the Maruti’s small car models, including Alto, declined as customers preferred to buy diesel-powered cars as the price of the fuel is about 30% cheaper than petrol.
Saxena said Maruti’s move to replace two cars with one would provide ample market space to the new product in the small car segment, which otherwise looks cluttered.