Maruti Suzuki’s big bet on selling cars only with petrol engines post the BS6 shift appears to be paying off—and especially in the entry-level sub-4 metre SUV segment (or subcompact SUVs), which has traditionally been a diesel turf. In the May-July 2020 period, the Vitara Brezza petrol (launched in February 2020) outsold every other SUV in its segment (12,921 units), despite most competing SUVs—including Hyundai Venue—being offered in both petrol and diesel engine options (the Venue did 12,105 units in the same period—8,332 units petrol and 3,773 units diesel). Shashank Srivastava, executive director, Marketing & Sales, Maruti Suzuki India, says that while the ‘gradual shift’ to petrol in the overall passenger vehicle (PV) segment started a few years ago, “in subcompact SUVs in particular that shift has been rather steep.” In April 2019, diesel subcompact SUVs enjoyed a 76% share, which dropped sharply to 23% in July 2020.
In April 2019, Maruti Suzuki had announced that from April 1, 2020, onwards it will have no diesel car on sale. One of the reasons was that, with BS6 emission norms coming into force in April 2020, it would vastly increase the price gap between diesel and petrol cars, alongside the increasing customer preference towards petrol. That time the company offered seven cars with diesel variants—Swift, Dzire, Baleno, Vitara Brezza, Ertiga, Ciaz and S-Cross—and these together accounted for a quarter of the domestic PV sales of the company. “We took that decision because we were already seeing a rapid increase in the sale of petrol cars,” adds Srivastava. “Today, the price difference between the diesel and the petrol fuel is down to a minimum.”
Diesel vis-à-vis petrol
Srivastava says that there is little economic logic to buy a diesel car now. “The upfront cost (of a diesel car) is high, maintenance charges are more (than a petrol), and Maruti Suzuki petrol cars in particular are almost as fuel efficient as a diesel,” he says. A diesel engine, due to higher fuel compression ratio inside the cylinder, is usually more fuel efficient than a petrol engine—and therefore diesel cars have lower running costs compared to petrol cars. To offset that, Maruti is offering its mild hybrid technology in its petrol cars. Called the Smart Hybrid, it has various fuel-saving features, such as the engine automatically stops when idling and starts when optimal conditions are met, and it comes with a dual battery setup including a lithium-ion battery (these batteries store the energy generated during braking to assist the engine’s idle start-stop and torque-assist functions).
The company is running campaigns at its dealerships and on its website to make prospective customers more aware about the total cost of ownership of a car. “When a consumer comes to us for enquiry especially for SUVs, a big question on her mind is why petrol? We have found that a lot of them still believe diesel is economical vis-à-vis petrol,” Srivastava says. “But often that is not the case. We have created a calculator based on the distance travelled, the place the person lives in, the diesel and petrol fuel prices in that area, and the upfront cost of the car. SUV customers—even in rural areas—are now getting convinced that a petrol car is, more often than not, the more economical choice, and that is one of the reasons the overall diesel SUV sales percentage is coming down.”
While the Vitara Brezza petrol is comfortably leading the subcompact SUV segment, that’s not the case in the compact SUV segment (more than 4 metres in length), where Maruti Suzuki has not been able to successfully challenge the competition ever since it launched the S-Cross in 2015. In fact, the S-Cross was initially branded as the ‘Premium Crossover’, but the new model, launched earlier in August, is being marketed as the ‘Refined SUV’. It competes with Hyundai Creta (launched in 2015) and Kia Seltos (2019), among others. “We are not the market leader (in compact SUVs) but there is a big customer base within this segment that wants a high-powered, sophisticated and fuel-efficient petrol car. The S-Cross produces power of a high 105 PS, yet it is almost as fuel efficient (more than 18kpl) as a diesel SUV,” Srivastava says. “In addition, it is now available in an automatic gearbox as well, which wasn’t earlier the case.”
He expects a new customer base for the S-Cross, and especially from the midsize sedan segment, which has been shrinking over the years, and which includes Maruti Suzuki’s own Ciaz, in addition to Honda City, Hyundai Verna, Toyota Yaris, Skoda Rapid and Volkswagen Vento. “Customers are increasingly preparing the body type of an SUV/crossover rather than a sedan.” Going forward, Maruti Suzuki hopes to replicate the success of the Vitara Brezza petrol with the S-Cross petrol also.
Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.