Maruti, Honda SUVs hit bump

Written by Yogima Seth | New Delhi | Updated: Jun 13 2009, 05:20am hrs
The exorbitant high prices of Honda CR-V and Maruti's Grand Vitara have resulted in customers moving away from these sport utility vehicles (SUVs) to more reasonably-priced SUVs. So much so is the fall in demand that both Honda Siel Cars India and Maruti Suzuki India (MSI) did not sell a single unit of each of these vehicles in April and May. Maruti Suzuki, infact, has been selling very low volumes of Grand Vitara over the last few months. It sold just one unit in February, only to completely exit the segment from March onwards.

"There has been over 35% increase in prices of Honda CR-V over the last few years from Rs 17 lakh then to almost Rs 23 lakh now, resulting in lower demand for the vehicle. Consequently, we have decided to no longer maintain inventory with our dealers for Honda CR-V and instead import the vehicle as per the order," Masahiro Takedagawa, president & CEO, Honda Siel Cars India (HSCI).

"Grand Vitara is set to appear in its new avatar in Japan and we will bring it to India in a month's time. As a result, the company has stopped selling the vehicle in the domestic market since March," says a Maruti official.

Industry analysts, however, have a different view on complete absence of these players from the segment. "The sport utility vehicle category in India has products across huge price range, starting from low-priced SUVs like Mahindra Scorpio to mid-priced cars like Ford Endeavour and top-end SUVs like Honda CR-V and Grand Vitara. Since rupee has been depreciating vis--vis yen over the last few months, these vehicles are becoming uncompetitive for OEMs, which are already working on wafer-thin margins with their bottomlines squeezed because of low domestic sales, to import them as completely build units (CBUs)," says Abdul Majeed, auto analyst and partner of Price Waterhouse. Indian rupee has depreciated by 9.8% since January 1 at 53.74 then to 48.42 now.

According to another analyst, the unavailability of more products at lower price range from HSCI and MSI in SUVs has taken a toll on sales. "At a time when economic slowdown has spread across every sector, car manufacturers need to have products across different price range to keep customers hooked to a brand, he said.