Amidst an onslaught from SUVs, an old favourite stands tall

At an ex-showroom starting price of ₹8.2 lakh, Brezza was way beyond his budget. On road, the lowest variant would have cost over ₹9 lakh.

“Looking at my requirement and budget, the sales executive suggested Wagon R. I was not very enthused and wanted something more striking as my first new car (he had a pre-owned Maruti 800). Ultimately, the head prevailed over the heart," Sahu says.

As an insurance agent, Sahu needs to travel long distances around Kanpur and the higher mileage and lower running cost of the compressed natural gas (CNG) variant he bought has resulted in immediate savings.

Nearly a 1,000km away, in Hooghly, lawyer Mahesh Chandra Das also bought a Wagon R in January but for very different reasons. He says having a car is a matter of prestige in the society. And he can charge a bit more from his clients as fees!

“A car is an indicator that you are doing well in life and reassures clients about my credentials," Das says. “I wanted a car which was not very expensive to buy or maintain but also not entry-level, like Alto (also from Maruti) or Nano (Tata Motors), which feels like a compromise. Wagon R fit the bill perfectly."

Up north in Moradabad, businessman Viraj Sandhu bought the automatic version of Wagon R last year—the hatchback joined his fleet of a Toyota Fortuner, a Skoda Octavia and a pre-owned Mercedes E Class. Sandhu uses his Wagon R for daily runs, around the congested alleys of the city. He swears by its efficiency and compact size. “I hate to admit but I quite like it. It is low on frills and not very sophisticated. But it gets me in and out of narrow streets like no other car. Now, I cannot even imagine driving the other cars in the city," he says.

The diversity in profile that Sahu, Das and Sandhu represent, highlights the almost universal appeal of the car that first made its debut in India in 1999. Back then, it was Maruti trying to play catch-up with Santro, a hatchback from South Korean carmaker Hyundai Motor India Ltd. Backed by a strong marketing muscle, one that involved actor Shah Rukh Khan, it had made its debut a year earlier and took the market by storm.

More than two decades later, Wagon R is witnessing a grand renaissance of sorts while most of its contemporaries have either exited the market—like Santro—or have fallen by the wayside.

In 2022-23, Wagon R was the largest selling car in the country for the second consecutive year. Moreover, its annual sales were the highest ever, topping 200,000 units for the first time. In a market infatuated with sports utility vehicles (SUVs), the car is an outlier.

“Am I surprised by the strong showing of Wagon R in the last few years? I can never agree to that. But in the context of how the others have fared, it is remarkable," says Shashank Srivastava, executive director, marketing and sales, at Maruti Suzuki. “At least, we have always believed that small cars are important for India and Wagon R is the perfect example."

Death of the small

The market for passenger vehicles in India is buoyant. In 2022-23, the segment grew nearly 27% to a record high of 3.89 million units. This is more than 40% of the pre pandemic tally of 2019-20. But the growth is not homogenous—it is led largely by SUVs.

In the last decade, sale of SUVs shot up, from just 270,000 units in 2009-10 to over 2 million units in 2022-23. During this time, the small car segment shrunk from 1.19 million units to 1.64 million units. In 2009-10, SUVs accounted for only 14% of the overall passenger vehicle market while small cars held the lion’s share of 61%. Today, the tables have turned, with SUVs cornering 51.5% of the market; small cars are down to 42%.

“The small car market, comprising of sub-four-meter sedans and hatches, is slowly de-growing. SUVs are growing," says Niranjan Prabhu, founder, Cargraphical Analytics Solutions, a company that provides automotive analysis.

Most small cars in India are well off their peaks.

Long time bestseller Alto, one of Wagon R’s most formidable rivals, is down over 48% at 179,698 units in 2022-23, from 346,840 units in 2010-11. Others like Maruti Swift, Celerio and Dzire are down 21%, 41.5% and 40.7%, respectively, off their peaks in 2018-19. The Hyundai Grand i10 is down 28% from its peak in 2017-18. The Renault Kwid, which had a dream start with over 100,000-unit sales in its second year in 2016-17, is now down over 80% at less than 20,000 units. Last fiscal, Maruti S-Presso could not even match its six-month sales numbers it recorded in 2019-20, its debut year. Even the premium hatchback from Maruti, Baleno, a relatively newer car, is 4% below its 2018-19 tally. Its rival from Hyundai, Elite i20, is down over 40%.

Meanwhile, Wagon R’s contemporaries—apart from Santro, there was Tata Indica—are all consigned to history. The old Santro was initially discontinued in 2014-15, only for the company to realize its mistake. The car was re-introduced in 2018-19 but it never took off and Hyundai pulled the plug again last year.

The Tata Tiago, launched in 2016, replaced Indica as a direct competitor. At 77,428 units, Tiago is also 16% below its peak of 2018-19.

There are multiple reasons why most small cars are struggling. Rising cost of entry-level cars, due to changes in regulations like safety and emissions, have coincided with lower disposable incomes among a section of middle-class consumers. At the mid and premium levels, where affordability is less of an issue, the onslaught of SUVs like Nexon (Tata), Brezza, Venue (Hyundai) and, more recently, Punch (Tata) is being felt. Yet, none of it has impacted Wagon R, thus far.

That’s even more impressive considering that there is not much difference between the price of Wagon R and the entry-level price of some smaller SUVs. The Wagon R’s price ranges between ₹5.52 lakh and ₹7.43 lakh, ex showroom, in Delhi. In comparison, the micro-SUV Punch starts at ₹5.99 lakh.

“It is a cash cow for Maruti. Their core competence in squeezing costs out of the system has ensured that all other competitors are slowly but surely dying," says Prabhu of Cargraphical. “Less options mean it has consolidated its hold in the small car segment," he adds.

The jury is divided on whether the SUV rush will eventually impact Wagon R. So far, there is little adverse effect. But more SUVs are on their way and the script can alter, going ahead.

“The advent of micro-SUVs, like Punch, and the upcoming Hyundai Casper (named Exter in India), may pose some competition but Wagon R will be able to withstand it due to its reputation and brand loyalty," feels Ravi Bhatia, president, JATO Dynamics, a market research company.

Something for everybody

There are other factors behind the brand’s overwhelming success. The availability of multiple options—the car comes with two petrol and CNG powertrains; with manual and automatic gearboxes—means it caters to a wider set of consumers. One in every three Wagon ₹sold in the country today is a CNG, the highest for any brand. It is also the car of choice for fleet and taxi operators that account for 13% of its sales, again the highest for any brand in the country.

The updates have also helped. It was last overhauled with a new platform in 2019, the second time in its 24-year lifespan. More features and a bigger 1.2 litre engine, in addition to the existing 1 litre powertrain, gave a new lease of life to the brand. Sales have rebounded and grown ever since.

“More than 40% of sales are from first-time buyers but the Wagon R customer is also very sticky. Repeat customers account for one in every four cars that are sold today," Srivastava says.

There is one glaring omission though—the absence of an electric version. As the most widely used taxi car, there is a ready-made market for an electric Wagon R.

“Wagon R is the ubiquitous city taxi and if Maruti can bring an electric version, I will be the first in the queue with a 10,000-unit order," says Anmol Singh Jaggi, co-founder and CEO of BluSmart Mobility, a ride sharing company. “It will substantially expand the market for us."

Though Maruti is keeping its cards close to its chest—its first electric car will hit the roads only by 2025— Wagon R electric is not entirely off the table.

“It could definitely add significant volumes as the brand recognition and trust that customers have in WagonR would give it an edge over the competition," says Bhatia of JATO Dynamics.

Safety howler

Nonetheless, Wagon R is not perfect. In fact, there are question marks around safety.

In multiple crash tests conducted by the Global New Car Assessment Programme (NCAP), a project run by UK-based charity Towards Zero Foundation, Wagon R has always been found wanting. In recent tests conducted only last month, it scored just one star for adult and zero for child safety. When it was tested in 2019, the car scored two stars each for adult and child safety. A score of five stars implies better safety.

“Wagon R also offered weak chest protection for the driver despite the improvements in the restraint systems by Maruti Suzuki since the previous version of the model was tested by Global NCAP," the organization said.

“Some car makers develop their cars to just pass a test; others to protect people. I think Maruti Suzuki is just aiming to pass regulatory requirements and not aiming to really protect the passengers, which in the end, are their customers," says Alejandro Furas, secretary general of Global NCAP.

Worse, the structural bodyshell integrity of Wagon R, which measures the ability of the car to withstand impacts, was rated unstable. It means that even the addition of safety features such as airbags will not necessarily make the car safe.

Maruti Suzuki has always rubbished these reports. “India’s crash safety regulations are almost similar to the standards in Europe and all our models meet these regulations and are duly tested and certified by the government of India," a company spokesperson said.

During a media event in December lastt year, chairman R.C. Bhargava played down the results of these crash tests. “NCAP is funded, to a large extent, by automotive component manufacturers, like airbag manufacturers. Somebody is promoting the NCAP standard for some reason, please don’t get taken in by it…" he had said. “I can say with complete confidence that putting in NCAP standards in cars will have no significant impact on the number of accidents," he further added.

Going by Wagon R’s sales performance, Indians perhaps believe what Bhargava says. Or, the huge brand loyalty the car enjoys simply overrides every other concern.

“I don’t know about crash tests; it doesn’t feel unsafe to me. At least, it is safer than a bike," says Satyapal Babbar, a Noida resident who drives an eight-year-old Wagon R.