Maruti Suzuki exploring India’s lowest-cost SUV

New Delhi: Maruti Suzuki India Ltd, India’s largest passenger vehicle maker, plans to develop a mini crossover—a vehicle built on a car platform and possessing the features of a sports utility vehicle (SUV)—for customers seeking higher ground clearance that allows them to travel in greater comfort on pot-holed city and rural roads.

Maruti, the Indian unit of Japan’s Suzuki Motor Corp., wants to put on the roads a vehicle that would be among the country’s most affordable in its class, according to two people with direct knowledge of the plan who declined to be named.

The maker of the best-selling Alto small car and Swift hatchback has started a market study to understand the needs of customers and to decide whether it is feasible to develop such a product at a price that can be affordable to motorists and make money for Maruti, said one of the people.

The plan isn’t final yet. Maruti is aware that meeting its own price expectations will be a challenge. The cheapest crossover in the Indian market is Toyota Kirloskar Motor Pvt. Ltd’s Etios Cross, which retails at Rs.5.76 lakh in Delhi.

“We don’t know yet if we can pull it off,’ said the person, an executive who sits on the Maruti board. “We have just started market research for this.”

A Maruti spokesperson declined to comment.

The car maker has aggressive marketing plans lined up for India in a plan it has billed Maruti 2.0—a roadmap for its growth in the next 30 years. By 2018, it plans to introduce as many as 14 new models, according to a presentation made by Suzuki Motor to investors at the Tokyo Motor Show in November last year.

“(India is) the most critical region to Suzuki and we will vigorously launch small cars and also new genre of cars such as SUVs,” the company said in the presentation.

Maruti aims to sell 2 million cars a year by 2020, when the overall Indian passenger car market is expected to increase to 5 million. In the financial year ended March, it sold a little more than 1 million units in the domestic market.

Maruti’s cheapest utility vehicle on offer is its iconic off-roader Gypsy, which is priced at Rs.5.42 lakh, and the seven-seater Ertiga that starts selling at Rs.5.80 lakh. Both prices are ex-showroom Delhi.

The first person cited above said the crossover vehicle that’s on the drawing board isn’t the XA Alpha, another compact SUV that Maruti showcased at the 2012 Auto Expo.

Maruti’s first compact SUV, the XA Alpha, is expected to be introduced in 2015-16. Prior to that, the firm will introduce a crossover, S-Cross, early next year.

The second person cited above confirmed that plans are being drawn up for another SUV but said those “are at a very preliminary stages” and the product may not see “light of the day” before 2018-19.

India’s utility vehicle market grew 12.17% to 272,323 units during the first half of 2014-15, according to the Society of Indian Automobile Manufacturers, a lobby group. The increase in sales is attributed to rising consumer aspirations and purchasing power.

Crossovers or small utility vehicles do not have the genes of a “true-blue SUV”, said Anil Sharma, a research analyst at IHS Automotive, an auto consultancy. “But trends suggest there is a market for such products. It looks like a novel experiment.”

With these so-called concept crossovers, typically built on hatchback platforms with some features of an SUV, car makers are eyeing a niche market and see a way to keep potential buyers interested until an entirely new model is rolled out.

At the February Delhi Auto Expo, Maruti displayed the S-cross, Toyota Kirloskar took the wraps off the Etios Cross, and Nissan Motor India Pvt. Ltd, which has entered the small car market with its Datsun brand, showcased the crossover Datsun Redi Go.

According to IHS Automotive, SUVs are expected to grow at a compounded annual growth rate (CAGR) of 17.64% between now and 2020 while the overall passenger vehicle market will grow at a CAGR of 8.05%.