After 14 years, Maruti regains 50% share of domestic market

New Delhi: Maruti Suzuki India Ltd is once again the company that sells every second passenger vehicle in the country, according to data provided by lobby group Society of Indian Automobile Manufacturers.

In July, the company sold 50% of the passenger vehicles in the country. Its sales were up 22.55% year-on-year to 110,000 units, while sales in the industry rose 11.43% to 222,000. During April-July, Maruti totted up its highest market share since 2001-02, selling 416,000 units, which is 47.51% of the total passenger vehicles sold in the country.

This marks its best performance since 2001-02, when the company recorded 50.4% market share in a market that saw sales of 675,000 units.

The July numbers mark a remarkable turnaround in the fortunes of Maruti Suzuki, which saw its market share plunge from 82% in 1997 to 38.3% in 2011-12, when the company was beset by labour strife at its plants in Gurgaon and Manesar in Haryana, and an appreciating yen that had made imports expensive.

But the market itself has become bigger. Between 2001-02 and 2014-15, the Indian auto market expanded from 675,000 units to 2.6 million.

R.C. Bhargava, chairman, Maruti Suzuki, attributed the loss in market share to the company’s inability to anticipate changes happening in the market. “By the time we brought in diesel engines, it was quite clear that diesel is going to be an important factor in the Indian market,” Bhargava said. “Where we went wrong was we did not anticipate the change that was happening in the Indian market.”

Maruti’s parent Suzuki Motor Corp. took 31 years to introduce its first diesel engine in India, which is what the Celerio has sported from June onwards. Since 2008, the company has sourced its 1.3-litre diesel engine from Fiat SpA under a licensing agreement. The engine powers its top-selling models such as the Swift, the Dzire, the Ertiga and the Ciaz. The new S-Cross crossover has a 1.6-litre diesel engine, also sourced from Fiat.

The other factor, according to Bhargava, that impacted Maruti’s sales performance was its negligible presence in the utility vehicle segment. “Suzuki was not strong in these segments,” he said.

The company did have the iconic Gypsy and the Grand Vitara, but while the former’s sales were limited to the armed forces and some offroading enthusiasts, the latter was considered expensive for the Indian market.

The company’s prospects look good as it has put a lot of focus on B-segment cars, which includes the Swift, an analyst said. The company plans to introduce a premium hatchback Baleno during the festive season this year.

“There is enough evidence in the market to show that people are moving from the A segment to the B segment. In rural areas, it is about the first-time buyers, but elsewhere people are upgrading to B-segment cars,” said Anil Sharma, principal analyst at auto consultancy IHS Automotive. “It is likely to pay rich dividends.”

“If it (Maruti Suzuki) continues to grow with the market, then it is expected to control 50% of the market in the coming years, too,” Sharma said.

One major concern may still be company’s absence in the compact sports utility vehicle (SUV) segment. “There are chances that it will give away some market share to its competition as it is not present in some niche segments such as compact SUVs,” Sharma said.

Maruti’s first compact SUV, code-named the XA-Alpha, is expected to be introduced in the Indian market in 2016.

The segment already has Ford India Pvt. Ltd’s EcoSport and Mahindra and Mahindra Ltd’s Quanto. Honda Cars India Ltd and Hyundai Motor India Ltd are expected to launch products in the segment soon.