Make up for the lost time | The Financial Express

Make up for the lost time

Maruti Suzuki, the original people’s carmaker, should be proactive in responding to the challenges of the future

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No one can deny that the reason for Maruti's success in India is its ability to understand the customer and make small cars which are fuel-efficient and value-for-money. (IE)

Chief executives rarely admit mistakes their companies have made in the past. It was thus refreshing to hear Hisashi Takeuchi, MD & CEO of Maruti Suzuki, admitting openly that India’s largest carmaker underestimated the speed of growth in demand for sports utility vehicles (SUVs), which now account for nearly 42% of total sales of passenger vehicles in the Indian market. Maruti’s conservative approach has seen its market share dropping to 43%, compared to 51% three years back as some of its competitors cashed in on the massive shift in consumer preferences.

Hyundai’s Creta, for example, has seen runaway success and is now the leader in the mid-level SUV segment. Tata Motors dominates the SUV space with aggressive product and powertrain interventions over the last few years. In fact, more than two-thirds of Tata Motors‘ sales in the personal vehicles segment in 2022 came from SUVs. It is, however, encouraging to see that Maruti is now trying to make up for the lost time. First, it was the all new Brezza and Grand Vitara, which have taken its market share in the SUV segment to 13.9%. The recent launch of two new vehicles—Fronx and Jimny—is also part of the carmaker’s ambition for the top slot in the SUV segment.

One hopes Maruti won’t repeat the mistake it made in the SUV segment in the electric vehicle (EV) space as well. While other large manufacturers have gone aggressive—Tata Motors, for example, has launched EVs in all segments, including a small car—Maruti’s first EV car will roll out only in 2025. While showcasing a concept version of an EV on the opening day of the auto expo, Toshihiro Suzuki, representative director and president of Suzuki Motor Corporation, said the company will not “rush into the EV space as India’s transition towards clean fuel cannot only be dependent on such vehicles”. The company also said that EV sales in India are still at a nascent stage, with low numbers. While it is true that small cars with conventional engines will continue to have a significant presence in a country where penetration is at a low 30 cars per 1,000 population, as opposed to China’s 221 cars per 1,000 population, it is equally true that the company has to be proactive in its response to the emerging segments. After all, the demand for small cars, the category Maruti created and leveraged in India, has been decelerating.

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No one can deny that the reason for Maruti’s success in India is its ability to understand the customer and make small cars which are fuel-efficient and value-for-money. The company has been arguing—with some justification—that relying on just EVs to achieve the twin objectives of reducing dependence on oil import and lowering carbon footprint is not an appropriate solution for India. Maruti has also said that, in India, about 75% of electricity is generated by burning coal. Hence, to run electric vehicles, more coal will be burnt, which is not environmentally friendly. But the market is giving signals of moving on, and Maruti is being perceived to be too slow in its response to the new realities. It is nobody’s case that Maruti should shift entirely to SUVs and EVs or abandon its bread and butter segment. But it definitely should not be seen to be lethargic in responding to the challenges of the future. Living too much in the past is never a good idea.

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First published on: 14-01-2023 at 04:30 IST