Maruti Suzuki aims to steer two-wheeler buyers toward cars
What's the story
Maruti Suzuki is banking on aggressive price cuts and festive finance offers to boost sales of its entry-level models, the Alto and S-Presso, in India. The company has set a target to sell between 220,000 and 250,000 mini cars in the current fiscal year. This strategy comes as part of Maruti's larger effort to regain market share lost due to declining small-car sales amid rising SUV demand.
Market performance
Maruti's market share hits lowest since FY13
Despite a sluggish passenger vehicle market with only 2% growth in wholesale dispatches last fiscal year, Maruti's market share has dropped to 40.9%. This is the lowest since FY13, when it was at 39%. The company held a dominant 51% share in the Indian market during FY19 and FY20.
Sales strategy
GST rate cut and ₹1,999 EMI finance scheme
Maruti's sales strategy includes a GST rate cut on small cars, resulting in an effective price reduction of 11-13%. The company has also launched a special ₹1,999 EMI finance scheme for entry-level models during Navratri to woo two-wheeler riders. The initiative has led to an increase in footfalls and inquiries from rural and small-town buyers. However, actual bookings are yet to see a major spike.
Market response
Entry-level segment showing signs of revival
Partho Banerjee, Maruti Suzuki's Senior Executive Officer (Sales and Marketing), has said that the entry-level segment is showing signs of revival. He revealed that the ₹1,999 EMI offer has received a positive response with many two-wheeler customers who didn't consider buying a car earlier now visiting showrooms. The overall booking momentum during this festive period has been strong, with Alto bookings in October up by around 60% compared to last year, Banerjee told The Economic Times.
Market doubts
Concerns about Maruti's ability to meet targets
Despite the positive response to its festive offers, not everyone in the industry is convinced that Maruti will be able to meet its ambitious targets. An unnamed industry executive said today's car buyers are more aspirational and prefer second-hand premium hatchbacks over entry-level models. However, analysts believe this renewed focus on affordability could help Maruti expand its base at some cost to profitability.
Strategic moves
Price cuts across Maruti's lineup
Maruti has slashed prices across its lineup by 2-21%, with the highest cuts on Alto, S-Presso, and Celerio (13-22%). Bigger models such as Brezza, Grand Vitara, and Invicto have seen cuts of 2-8%. Despite these changes, Banerjee said Maruti remains committed to having a balanced presence across segments including hatchbacks, SUVs, MPVs, CNGs, hybrids, and EVs.