Maruti Suzuki's market share nears lowest ever, SUVs to blame
What's the story
Maruti Suzuki, a leading player in India's passenger vehicle market, has witnessed its market share plummet to around 39%. This is largely due to the rising popularity of SUVs and premium features like sunroofs. The company has long focused on affordable cars but is now struggling to keep pace with changing consumer preferences.
Market shift
Shift in consumer preference affecting Maruti Suzuki
For nearly four decades, Suzuki cars have been a common sight on Indian roads. Maruti Suzuki's hatchbacks accounted for up to 80% of India's new car sales in recent years.
However, Indians have now started preferring larger, more feature-rich vehicles.
This shift has taken a toll on Maruti Suzuki's market share in the world's third-largest auto market, which now stands at around 39%, close to its lowest ever.
Adaptation challenges
Japanese company's cost-effective approach hindering progress
Suzuki's difficulties highlight how cost-conscious managers in Japan have been slow to respond to the evolving tastes of newly affluent Indians.
They believed that features like sunroofs, advanced tech, and SUVs were not worth the cost for Indian consumers.
Maruti Suzuki managers had proposed adding sunroofs nearly a decade ago but Japanese bosses deemed it impractical given India's weather conditions and road infrastructure, Reuters reports.
Delayed response
Indian competitors outpace Maruti Suzuki in offering premium features
Maruti Suzuki only introduced sunroofs in 2022, by which time competitors Tata Motors and Mahindra & Mahindra had already made them standard on a quarter to a third of their cars sold in India.
The company's market share has also been affected by the declining demand for small cars, slow SUV rollout, and its 2020 decision to stop selling diesel cars.
Strategic shift
Maruti Suzuki still remains a profitable venture for Suzuki
Despite its commitment to affordable and compact models, Suzuki has now asked local managers to "pay more attention to the Indian customer."
Maruti Suzuki still runs a profitable business in India with revenue more than doubled over the last five years to $19 billion and profit tripling to $1.5 billion as margins improved.
However, it has not been able to meet CEO Toshihiro Suzuki's target of capturing half the market share.
Future strategy
Carmaker working on expanding its SUV portfolio
Maruti Suzuki is now expanding its R&D teams and giving executives more autonomy to make decisions locally.
The company aims to cut the average product development time from 48 months to 36 months.
It has also launched pricier, design-forward cars such as a three-row minivan and plans seven more SUVs by 2030.
However, less than 3% of Maruti's sales come from cars priced above $15,500, compared with over 21% for the rest of the industry, according to JATO Dynamics.