Maruti plans mid-market car parade, goes slow on premium

Written by Roudra Bhattacharya | New Delhi | Updated: Dec 24 2012, 09:26am hrs
Maruti Suzuki has planned a slew of launches in the mid-level segments (B & C) in the next two years as it sees consumer preference moving up the value chain. However, the company will not enter the premium segment as it does not see it as its area of core competence.

Three sedans are in the works, with a new B-segment model priced Rs 7-9 lakh slated for launch around late 2014, competing with the likes of Nissan Sunny and Hyundai Verna. Developed on the extended new Swift platform, this may be positioned between the Dzire and SX4 and will extensively share components with the Swift to cut costs.

Maruti MD Shinzo Nakanishi said the B-segment is now 21% of the car market from 15% two years back while the C segment is 9%. The share of A segment (small cars) is down to 70% from 80%. We will look at all segments below the D-segment, but one thing is clear that Suzuki will never go to the premium segment, Nakanishi, however, did not comment on product plans.

The second sedan will be the larger and more luxurious new SX4 planned for launch in 2014-15 which will take on Toyota Corolla and Hyundai Elantra. The third model will be an entry-level sedan that is reportedly in the works a sub-4 metre model probably even smaller than the Dzire and based on the next generation Suzuki Alto (or A-star in India).

The idea is to build on scales, and move up market where the margins are higher. Building 3-4 cars from the same component bin as the Swift will significantly reduce costs per unit. The same strategy will follow in other segments, a source said.

Marutis premium vehicles have usually proved a hard sell. Both the SX4 and Kizashi, and even the Grand Vitara SUV, have attempted to replicate Marutis success in the mass market, but the lack of a premium image did not help. During April-November, SX4 sales dipped 63% to 4,248 units, even as segment leader Hyundai Verna sold upwards of 40,000 units and the segment grew 8% to 1.33 lakh units. The executive sedan segment contender Kizashi sold 141 units in the period, less than half of last year.

Said chairman RC Bhargava: We will not lose our brand image. Maruti is a first class small car maker and will look to protect that.

There are big designs for the utility vehicle segment as well. A sub-four metre compact SUV, likely called the new Jimny and based on the XV Alpha concept shown at the Delhi Auto Expo this year will be launched in 2014-15.

With a highly competitive pricing in the R7-9 lakh range, it will hope to replicate the success of Marutis Ertiga MPV.

The new Grand Vitara is expected to come close to 2016 and will be based on the Kizashi platform.

We made our intention clear at the Auto Expo (displayed the compact SUV concept) and work is progressing rapidly on it. UV is a growing space and Ertiga was our first mark. Were talking about few other products, but have to see what fructifies, a senior Maruti official said.

VG Ramakrishnan, managing director at Frost & Sullivan, South Asia said that it is important for Maruti to be a step ahead of the competition by having as many models as possible in the Rs 2-12 lakh range.