Maruti Suzuki bets on network scale to fend off growing competition

This year will see the entry of at least one new entrant in the Indian passenger vehicle (PV) industry in the form of Citroen, while still relatively new and small players like Kia, Renault, and other existing players make some aggressive moves to gain more respectable shares of the market pie. In such a scenario the market leader may face pressure to sustain its performance, and position.

In an exclusive interview in Autocar Professional’s interview series, Autocar Professional Dialogue, R C Bhargava, chairman, Maruti Suzuki says, “Our biggest strength is that we have today about 4000 service points in the country, and growing. They're growing every month. No one is anywhere close to that. A customer wants good quality after sales service, as conveniently and as economically as possible.” He also adds that building good quality vehicles is important but good quality, economical after sales service is “as important if nor more important”.

While a Citroen, with its first model expected to be priced above Rs. 20 lakh and scheduled to be launched in April, may not be a direct competition to any of Maruti Suzuki’s existing models, the market of vehicles above Rs.10 lakh is set to clock better growth as the economy improves.

>

Currently, Maruti Suzuki’s presence in this part of the market is quite a contrast to its overall industry share. Bhargava says that the OEM will offer more SUVs to benefit from the growing appetite for such vehicles, but he is also of the view that the demand for smaller vehicles like hatchbacks will continue. “Today India is only at around 30 cars per thousand people, and there's a lot of scope for that to grow. The number 30, I expect will in the first stage will at least go up to about 100 vehicles per thousand, and a bulk of those will remain at the lower end of the market,” says Bhargava.

Maruti Suzuki, which started its journey in 1982 as Maruti Udyog – a joint venture between Suzuki Motor Corporation and Government of India, has taken a huge lead over the years in the highly competitive yet promising Indian PV industry. Will this enviable performance, unheard of in any other market, be sustainable as India sees not only industry higher industry volume but also more competition?

“The Indian market today is quite small but then it's going to become a 10 million a year market and then 15 million a year market. At that stage a 50 percent market share would mean 5 to 7.5 million cars a year. That's a lot of cars for a company to produce and sell in one country. Let's see. It's a mindboggling figure but who knows. I don't know what the future will be so I'm not going to make a guess even as to whether we will be at 50 percent, or something lower,” says the industry veteran, while adding that managing the business at that level will be a totally different ballgame. For now, Maruti Suzuki’s focus will be to sustain its performance in areas where it is already strong and build presence in a growing segment like SUVs, to remain ahead in the race, by a good margin. Being the most successful subsidiary for Suzuki Motor Corporation, which turned 100 in March 2020, Maruti Suzuki will attract special attention from its parent to be able to explore, tap new opportunities for growth. Some of the measures were laid out in the Japanese major’s 5-year business plan released on 25^th February.