Maruti Suzuki: Maruti zips past a big milestone, but will it regain its lost mojo?

Four decades after it produced its first car, India’s iconic car company Maruti Suzuki India Ltd has zipped past another milestone. It has become the first passenger vehicle maker in India to cross Rs 1 lakh crore in revenues. That also puts it among the top 30 global carmakers by revenue, at rank 28th. Tata is already among the top 30 but due to the revenue contribution from its British brand Jaguar Land Rover.

“From nowhere we have reached here,” RC Bhargava, chairman Maruti Suzuki told ET yesterday. Bhargava is right. Maruti was envisioned as a “people’s car”, affordable enough for the middle class, to be wholly made in India. But when the government incorporated the Maruti Motors Limited In June 1971, it had no blueprint or plan or any idea how the car would be manufactured. The government had floated the company on the brainwave of Sanjay Gandhi, then prime minister Indira Gandhi’s son, who had apprenticed at Rolls-Royce for three years in the UK and was convinced common Indians must drive cars. Even a decade later, after Maruti finally started out, the new company Maruti Udyog Ltd, imported fully built cars from its partner Suzuki.

Maruti Suzuki has crossed Rs 1 lakh crore milestone literally when it came from nowhere. It just missed another landmark rather narrowly. It sold 1.96 million vehicles in 2022-23, just a little short of 2 million.
Thriving on the Japanese knowhow and management, Maruti Suzuki gained from being the first-mover in the small-car market, enjoying a monopoly for a long time. However, now with a wide range of car manufacturers to vie with, it needs to keep reinventing itself. In the car market, Maruti Suzuki is the leader by far at nearly 40%, with its rivals such Tata Motors and Hyundai lagging far behind, below 15%. But it has recently lost market share in reconfiguring car market where SUVs have come to comprise nearly half of all car sales.

From small cars to SUVs
Maruti 800 came to acquire an iconic status for its nimbleness as well as low price. It was also smarter and quicker than the Premier Padmini and the Ambassador, the cars that dominated India at that time. The nifty Maruti 800 symbolised an India trying to break free of the stagnation of pre-Liberalisation times. With its Japanese technology and management, Maruti 800 also symbolised the modern efficiency which India’s socialist economy was seen to lack. It revolutionised society as it made India’s middle class, which mostly rode Chetak, Priya and Vespa scooters, the car owners.

Having long broken free of the old, socialist economy, now India has reached another level of aspiration. It aims to become the third-largest economy in the world. If we follow the paralell between the Indian eocnomy and its cars, this aspiration is symbolised by sports-utility vehicles (SUVs). If Maruti 800 symbolised the speed and nimbleness when Indian economy was caught in stagnation, SUVs symbolise the heft, the brute power and technological advancement which India seeks now to emerge as an advanced economy.

The SUVs made up more than half of India’s record 4 million passenger vehicle sales in fiscal year 2022-23, signalling growing popularity of the relatively pricier vehicles in a budget-conscious market. With SUVs gaining share in India’s total car sales, the small-car leader Maruti Suzuki has lost market share. It had sold 2.02 lakh SUVs in the last financial year with a market share of nearly 13 per cent.

Maruti has over 40% market share in the passenger vehicles segment. Five years ago, in 2018-19, its overall share of the Indian car market was nearly 51%. The slide in the market share corresponds with the rise of the SUVs among India’s total car sales.

Maruti Suzuki’s SUV play
Maruti Suzuki is planning to double its SUV sales this financial year and take the leadership position in the fast-growing segment with a market share of over 25 per cent. It had sold 2.02 lakh SUVs in the last financial year with a market share of nearly 13 per cent. However, in FY24, the company aims to sell around 5 lakh units. A Maruti Suzuki executive had told PTI that the doubling of the market share in the SUV segment would help the company in its bid to again surpass the 50% market share mark in the domestic passenger vehicle industry.

Maruti Suzuki has proved that it is not just a small- and middle-car specialist, the image it had developed in past many decades. It broke out of the stereotype with the success of Brezza and Grand Vitara. The doubling of net profits in the last financial year indicates pick up in SUV sales. Brezza is leading the entry SUV segment. “We ended the fourth quarter at around 17 per cent. So we have gained market share due to the better availability of Brezza and the introduction of Grand Vitara,” a company executive told PTI. He noted that the company’s SUV market share has been increasing over the last few fiscal. It stood at 10.5 per cent in 2021-22 and increased to 13 per cent last fiscal, he stated.

In the current year, the company is also relying on addition of two new models, Jimny and Fronx, to bulk up its SUV sales. A company executive said it had already received close to 41,000 bookings for the two models which are slated to hit the market over the next few months. According to JM Financial, after two consecutive years of market share loss, the company is at the cusp of market share recovery led by new launches.

Maruti Suzuki may be a bit late to the SUV club but it is slowly gathering momentum. With the success of Brezza and Grand Vitara, it has proved that it can reinvent itself and can’t be written off in the emerging segment. Experts have told ET Prime there are a significant percentage of people in India who still wait for the Maruti vehicle rather than choose a competing brand. Maruti may be able to capitalise on this yet again and trump its competitors.