Maruti Suzuki's SUV sales accelerate

Maruti Suzuki, India's largest carmaker, aims to sell nearly 500,000 vehicles in FY2023-24 to become the top-selling brand in the Indian sports utility vehicle (SUV) segment. The company plans to double its volumes from the previous year and gain market share in the SUV segment, which currently makes up 40% of passenger vehicle sales in India. Maruti Suzuki already has 194,000 pending orders for its SUV range, including the Brezza. The automaker aims to increase its existing 17.5% market share in the segment to 25% by introducing new products, including compact SUVs Fronx and Jimny.

To achieve the target, India’s biggest automaker plans to focus on boosting sales of its SUV models that cost ₹10 lakh or more and consolidate its brand positioning through its premium Nexa sales channel.

Maruti Suzuki doubled its share in the category to 17.4% last month, up from 8.8% in February 2022. Rivals Tata Motors, Mahindra & Mahindra did manage to grow volumes in the segment in the period under review but saw a decline of 2.3% and 0.7% in market share, respectively.

Maruti has over 40% market share in the passenger vehicles (PV) segment. In 2022-23, Maruti sold a total of 1.96 million vehicle.

Maruti Suzuki India Ltd is moving into the premium three-row segment with its latest offering, Invicto. The company is seeking to reinvent itself as a premium brand with Invicto putting the company in an entirely new territory, the above-Rs 20 lakh segment. The increasingly crowded Indian market previously encouraged compact cars, but rising incomes, middle-class adventurism, and demand for premium vehicles have disrupted this.

India's passenger vehicle shipments increased by 12.9% YoY to 331,747 units in April, with all automakers stepping up supplies to dealerships. However, the limited availability of semiconductors affected the production operations of Maruti Suzuki. Retail sales of passenger vehicles marginally grew by 3.5% YoY to 285,700 units during the month. While Maruti Suzuki reported robust increasing volumes in April, its sales were constrained due to a shortage of electronic components that affected deliveries. Despite an increase in enquiry levels following the introduction of new SUV models, concerns remain over inflation and the possible weakening of consumer sentiments due to less favourable monsoon rains.

Maruti Suzuki reported an all-time high profit figure, becoming the first passenger vehicle maker in India with an annual turnover of over Rs 1 lakh crore. However, the company's market share in the passenger vehicle segment slipped to 41% in FY23 from 51% in FY20, led by a demand shift to SUVs where it has a weaker presence. Most brokerages have maintained their bullish view on Maruti Suzuki's stock, with target prices going beyond the Rs 10,000 mark. However, Kotak analyst Rishi Vora has said that the company is expected to find it challenging to regain lost market share.

India's enduring fascination for SUVs continues, fueled by practicality, spacious interiors, and perceived safety. More than half of the 16 passenger vehicle models that surpassed 100,000 unit sales in 2023 were SUVs. The trend is likely to continue with new SUV models proving to be instant hits. Demand for hatchbacks and sedans has fallen sharply, with over half of new car buyers preferring SUVs. Maruti Suzuki aims to increase its SUV market share to 25% this year, launching the Fronx and Jimny models.

Suzuki – which aims to grow global volumes by 6.2% or 186,000 passenger vehicles in the ongoing fiscal – expects its subsidiary Maruti Suzuki to outperform competition in the local market this fiscal.

The pandemic depressed the passenger vehicle market across the world. India emerged as the fastest-growing automobile market for a key reason. Semiconductor chips, important components for cars, went scarce due to the pandemic disrupting supply chains. And when the pandemic effect started waning, there was a big scramble for those chips. India was able to produce cars faster than other major markets because its cars have fewer chips.