The Economic Times on Sunday MAY 29, 2011

12

cover story

A3 Segment Model: Swift Dzire, SX4

The A2 Segment is Marutis Mainstay

Segment-wise break-up of Marutis car sales

14.16% 3.03%
A4, 5, 6 Segment Model: Kizashi

13.99%
A2 Segment
Models: Alto, WagonR, Ritz, Swift, A-Star, Zen Estilo

Utility Vehicles Model: Gypsy, Grand Vitara

57.87%

7.71%
Multi-Purpose Vehicles Model: Omni, Eeco

3.25%
...but its share in this vital segment is falling...
59 58.5 58 57.5 57 56.5 56 55.5 55 Figures in % 54.5 March 06 March 07 March 08 March 09 March 10 April-Jan 11

Note: Above figures are for April 2009-March 2010

A1 Segment Model: Maruti 800

58.5 58.49 58.11 57.74 56.12

Marutis share in A2 segment over the years

competitors, the first instinct is to follow. We follow someone who is No. 1 and learn from them from Nissan and Toyota, says Nakanishi. Yet it is this humility and honesty which reassures that the company with the slogan India comes home in a Maruti is serious in taking the battle of its lifetime head on. But first more on the magnitude of it challenge.

The Competition Strikes at the Heart

55.99

...as more and more auto giants increase their presence in India...
Market Share (%)

Company Maruti Suzuki Hyundai Tata Motors Mahindra General Motors Ford Toyota Honda Volkswagen Fiat India
Sources: SIAM & Maruti

09-10 44.63 16.14 14.65 7.72 4.46 1.89 3.27 3.17 0.21 1.27

10-11 44.94 14.26 13.97 6.79 4.25 3.91

GRAPHIC: MUKESH

3.34 2.36 2.05 0.84

Marutis fiefdom has been the compact A2 segment with models like Alto, WagonR, Ritz and Swift. Though Hyundai, Tata and GM have successful models in this segment, Maruti continued to rule. Thats set to change now. The companys market share in this segment has slipped from 58% in 2006 to 56% in 2011, as newer, snazzier entrants like Volkswagens Polo and Fords Figo attract a younger audience that is less fussed about price and more keen on looks, features and brand. Toyota will soon launch the Etios Liva small car whose Etios platform has been developed specifically for India. Hondas small car Brio is likely to be launched this year. They are all coming straight at Marutis jugular, says Hormazd Sorabjee, editor-in-chief, Autocar. VW wants to grow its India market share from 2% to 20% by 2018. If that sound ambitious, keep in mind that between 2010 and 2011 in one year alone the company grew from just 0.2% to 2.0% of Indian market. Toyota recently assigned 100 senior executives at its Japan HQ to focus solely on emerging markets. Ford plans to export the Figo to 50 odd countries from India. India is developing as a global small car hub, says Neeraj Garg, director, VW Sales India Group. Companies arent developing small cars for India alone, they are doing so for their older and bigger markets too. Recession and environmental concerns are convincing the western world to ditch the gas guzzlers and hop on to small cars. For example, in Western Eu-

rope, share of small cars has touched a high of 35% and, in North America, its expected to double to 8% by 2020. That Marutis small-car bastion is under attack is just one half of the problem. The other is that Indians are looking beyond small cars and are willing to upgrade in line with their rising incomes and aspirations. A car is no longer just about mobility but also a personality statement. Consumers expect the comfort and convenience of their drawing room, says I V Rao, managing executive officer, research & development (R&D), Maruti. This helps the car biggies, whose portfolio is skewed towards higher-end cars, compete more effectively with Maruti in India.

Drool Quotient
Maruti on the other hand is so deeply entrenched in the no-frills value-for-money segment that it will have to substantially reposition itself to cater to the new Indian middle-class. And even if it does have some fancy cars its portfolio like SX4 and Kizashi it has its task cut out trying to convince well-heeled consumers that Maruti too has a drool quotient. Maruti does not even cross my mind when I think of buying a car, says Partha Sinha, managing partner, BBH India, an advertising agency. To be fair, Maruti has been trying to move up with the customers by launching bigger cars like Grand Vitara, Dzire and SX4. The latest is a premium saloon called Kizashi, priced at around `17 lakh. Still, 90% of Marutis sales come from small cars. And here the competition is intensifying.

An Enemy Called Complacency

The good news: neither Maruti nor Nakanishi are in denial. And they are doing all they can for the big battle. Last summer, Nakanishi played a little trick on his staff. He re-jigged the way Maruti calculated its market share internally. Till then, Maruti added segment sales

...that have technological and financial edge...

Annual car sales (global) Toyota VW Suzuki Average price of cars (global) Annual revenue (global) VW Toyota Suzuki

...but Maruti is fighting back...

...With Indias biggest automobile R&D with 1,110 engineers New models and variants that identify gaps in the market Deeper & wider dealer networks to expand its reach

VW and Toyota

Suzuki

7.5m 6.5m 2.6m

$25,000 $10,000 $150b $210b $32b