Maruti’s increasing presence in the higher price-point segment is also having a positive impact on its net realisation per car. The management of Maruti Suzuki has said the risk of the Baleno cannibalising sales of the Swift are minimal since it's mainly the top-end variant of the Baleno that is in demand. That means the company is getting a higher realisation per car, even if the Baleno takes away some Swift volumes. “For the Swift most inquiries are for the mid-varaint while for the Baleno over 50% of the bookings are for the top-end variant. The difference in prices is quite wide and therefore there is limited cannibalisation,” the company management said in response to queries of analysts on Baleno eating in to the share of Swift and Dzire. Although the company does not disclose model wise margins, analysts said that the margins are higher for a premium product compared to others. While the mid-variants –the VDI and VXI trims—of Swift are priced between Rs 5.43 lakh to Rs 6.43 lakh, the top variant of the Baleno, is priced at R8.16 lakh, ex-showroom Delhi. Baleno was launched in October last year. An analysis by UBS Research on industry volumes by price points indicates significant upward shift in industry volumes towards higher price points over the last five years. “Maruti has been able to successfully upgrade itself by significantly improving its market share in higher price point segments while retaining its dominance in the entry level segment,” the UBS report from earlier this month said. Maruti’s increasing presence in the higher price-point segment is also having a positive impact on its net realisation per car. In the October-December quarter of 2015-16, the company's net realisation went up 3.4% year on year while ebitda per units saw a growth of 13%. “There has been a shift in the customer preference, particularly in the urban markets. Urban market customers are now exploring the premium products when the price difference of a premium product is higher by around Rs 2-2.5 lakh,” Abdul Majeed, partner at Price Water House and an auto expert said. Further, when it comes to Swift, there is also a certain amount of “product fatigue” in the market as it has been selling for many years now. “So customers prefer to own a newer nameplate than an old one,” he said. Despite the fall in volumes, Swift continues to be among the top five selling cars in the country, industry data shows. Moreover, in December, the Baleno even took over the Hyundai Elite i20, which is among the top-selling models in the premium hatch-back segment, by a narrow margin. While elite i20 saw volumes of 10379, the Baleno sold 10572 units.
Risk of Baleno eating up Swift sale is minimum: Maruti
That means the company is getting a higher realisation per car, even if the Baleno takes away some Swift volumes.
By: Shaikh Zoaib Saleem | Updated: March 14, 2016 6:42 PM