October 26, 2015 9:40:07 pm
Maruti is the biggest corporate operation for Suzuki globally, but there weren’t any prizes for guessing that ever. The magnitude of its importance hasn’t played up amidst bagpipes and much celebration that often, however. India and Japan make up about two-third of Suzuki’s global business, so you can now understand how crucial is Maruti to Suzuki’s global play.
Traditionally, Maruti has had a small-car-heavy product portfolio that’s done brilliantly in the Indian automotive topography. Maruti has given no-frills, efficient, and reliable motoring experience to millions across the nation. But what is it they say about time — that it changes constantly and whatnot.
It’s true though — times do change. In the automotive industry, it’s been a highly evolving time over the last decade. It may not have evolved quite like the European markets yet, but the Indian buyers have matured immensely and aren’t looking at outright buying costs alone. They’re looking at the value they get with their purchase — the classic VFM (value for money) premise. That’s where Maruti’s chief rival, Hyundai, has been scoring one home run after another.
Hyundai, over the years, became so good at feeling the pulse of buyers and packing its cars with features that found mention only in brochures of cars from a segment or two higher that even the likes of us motoring hacks passed the inclusion of more features than competition as a default practice by Hyundai. But that gave a clear insight into something very important — that the Indian automotive buyer understood the difference between value and cost.
Honda, despite its brand equity and snob value, couldn’t make the previous-generation Jazz work at all. It was a (relatively speaking) premium hatchback in a crowd of drab small cars at the time and it brought a fresh, aggressive perspective to the market. Result? It bombed. Quite badly. It was a bit too expensive in its time and the buyers didn’t see much sense to spend between 8-9 lakh for a hatchback — they’d much rather invest that money in a traditional sedan; which they did.
Hyundai, in India, managed to achieve what Honda could not (and to think this would’ve been a statement of great proportions till a few years ago!) — it made the i20 work. Brilliantly. The i20 is a segment leader and sells for close to Rs 10 lakh in some markets and yet there’s a waiting period extending north of 4 months on it. A hatchback selling in big numbers for 10 lakh rupees — see, times have changed! Some might say that Hyundai was quite gradual, while some may opine that it was very rapid in focussing on the segment that enabled a higher margins play. Whatever the case may be, the fact is, Hyundai was brave in doing so.
Now, Maruti is getting eager to chase higher margins per unit sold. The Nexa brand of exclusive showrooms prove that intent. In my view, the spine of Maruti’s operations will continue to be its cars ranging from the Alto to the Dzire — those that make the sales report look pretty. That said, the introduction of the S-Cross, and its sale exclusively through the premium Nexa dealerships indicates at a dramatic ‘positioning’ game by the company. Interestingly, online search trends suggest that people are still quite confused about the identity of Nexa — many think it’s an actual car!
The trouble is that Maruti never had any big-margin product that made an impact. The original Baleno was a sales disaster, while Maruti’s other efforts like Grand Vitara and Kizashi to enter the premium segment are now case studies on how not to hit the market. The market maturity, however, suggests that the reintroduction of the Baleno nameplate and an aggressive product strategy driven by competitive pricing structure (starting price of Rs 4.99 lakh is an attention grabbing figure and should get great footfall at Nexa showrooms — something that the S-Cross didn’t quite manage as well as Maruti had hoped) might finally work for Maruti this time around.
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