With premium compact hatchback emerging as the new style icon in the car segment, which is best visible with the huge success of Hyundai’s Elite i20, no wonder the country’s largest car maker Maruti Suzuki is also foraying into the segment.
The company’s premium hatchback, Baleno, was launched on Monday and will be retailed from its newly launched Nexa showrooms. The Nexa showrooms were launched in August with a focus to segregate the company’s models which are premium from the regular ones.
So, while models like Alto, WagonR, Celerio, Swift and Dzire continue to be sold through the existing dealer networks, the newly launched model S-Cross and now Baleno will be sold through Nexa.
Analysts see Baleno posing a major challenge to Hyundai’s i20 as this is the first time that Maruti is entering into this segment. Though Maruti has Swift, which is also a compact hatchback it is not in the premium category. The premium cars are slightly bigger than their regular counterparts and sport lot more features.
However, the only challenge Maruti will face in taking on the i20 is competing on the number of showrooms through which Baleno will be retailed. It will have to increase the number of its Nexa showrooms for an effective fight. Currently, there are 80 outlets of Nexa.
The vehicle is based on a new platform and will come with a fully automatic CVT engine. The company has invested more than Rs1,000 crore in the development of the product and has plans to export it to 100 countries. This will be Maruti’s third vehicle launch in the premium segment since August after the introduction S-cross and hybrid diesel variant of Ciaz.
With the increase in aspiration and disposable income of the customers, premium hatchback segment is becoming a preferred choice for customers who want to upgrade from the hatchback segment. According to data compiled by HSBC, this segment now commands 35% of the total passenger cars sold in a month which translates into 55,000 vehicles per month.
We think market share gains by Baleno will be both volume and margin accretive. Further, it provides a long term for upgrade option for potential Swift buyers, said HSBC in its report.
The success of Ciaz in the mid-size sedan segment will further help Maruti to attract customers in the premium market. The strategy to launch the vehicle before Diwali will help the company to make an instant impact in the market as customers look to buy new vehicle during the festival period.
Car sales during the festive period account for one-third of the total vehicles sales during a particular year. According to industry experts most of the growth in the domestic automobile sector is driven by new products and the launch of Baleno will help increase volumes for Maruti.
