Production loss of 200,000 units in FY2023 drags Maruti Suzuki market share to 8-year low
Inconsistent semiconductor supplies prevent PV market leader from achieving higher output resulting in fewer showroom deliveries and its share dropping to 41%. However, it remains confident about speedily recovering lost ground in FY2024.
Despite sitting on a sizeable order book of over 395,000 units, Maruti Suzuki, India’s largest carmaker, has slipped to its lowest market share in 8 years – 41.31% – in FY2023 due to severe shortage of semiconductor chips. If it weren’t for this supply issue, the company could have produced almost 10% more vehicles and easily exceeded its internal target of 2 million units on its own.
Despite record sales, output as well as a clutch of new models including SUVs, Maruti Suzuki saw its market share decline by 200 basis points from 43.3% to 41.3% in the past year. As per SIAM, Maruti Suzuki manufactured a total of 18,78,801 units, up 16% on its FY2022 production.
Lower output due to chip shortage and limited SUV options meant that rivals capitalised on Maruti’s shortcomings. Over the past couple of years, the company would have cumulatively lost production of about half-a-million vehicles, which translates into almost Rs 30,000 crore revenue foregone.
Autocar Professional learns Maruti Suzuki lost between 50,000 to 55,000 units in Q4 FY2023, leading to a cumulative loss of over 200,000 production units in FY2023. The new fiscal and April 2023 too have not got off to a good start in terms of supplies and it looks like Q1 FY2024 (April-June 2023) is likely to be impacted adversely.
Shashank Srivastava, Senior Executive Officer, Sales & Marketing at Maruti Suzuki India, says, FY2023’s was the company’s highest ever output. If not for the chip shortage, the 2 million production mark would have been easily breached as a result of strong consumer demand for its cars and SUVs. “We did fall short of 2 million units, if you were to look at output from our factories in NCR and Gujarat. But if you include brand of origin – i.e. volumes of Suzuki-origin vehicles irrespective of the selling OEM (sourcing and supply arrangement with Toyota), then we have crossed 2 million.”
He also confirmed that the (semiconductor) shortage continues to impact production in April and the situation is unlikely to change in all of Q1 FY2024.
Maruti is banking on the Jimny, Grand Vitara and the Fronx to accelerate demand for its SUV portfolio in FY2024.
Aiming for 500,000 UV sales in FY2024
“From the demand standpoint, FY2023 was quite buoyant and we ended with 395,000 units of pending booking running into FY2024. In the segment where we are strong, demand was relatively soft in FY2023 and the segment which was the fastest growing – SUVs – is where we have relatively lower market share. This factor also impacts our overall market share besides the reduced availability. We are hopeful that may get fixed during the year and we will gun for SUV leadership,” pointed out Srivastava.
Maruti Suzuki, which sold a total of 3,66,129 UVs in FY2023, has set itself a target of selling over half-a-million SUVs and doubling its market share to 25%. This in a market which is likely to slip to 5-7% growth, after a record-breaking FY2023.
If Maruti Suzuki is able to attain the target, then its market share may inch back to 45% at the end of FY2024 before it redoubles its effort in FY2025 to target 50% share with the expanded range and half-a-dozen SUV options.
It is reliably learnt that Maruti Suzuki has set itself an internal target of 2.3-2.5 million units in FY2024, which is very ambitious given the overall macro-headwinds and softness in the marketplace.
In FY2023, the car and SUV maker executed four full model changes and three minor changes while also starting production of the Grand Vitara SUV from Toyota Kirloskar Motor’s factory in Bidadi, Karnataka. The company thanked its supplier partners for the support during these uncertain times.
With India taking over as the third-largest automobile market in the world, there is a great opportunity for Maruti Suzuki to drive future growth. However, this opportunity comes with its own set of challenges.
“Even though we have taken various actions jointly to manage the semiconductor shortages, this will continue to impact a few specific models. We must build flexibility in our processes by design itself. This will enable faster transition across models/variants and adjust production as per the demand,” company has stated in a note to its vendors and stakeholders.
Meanwhile, with construction beginning on the new plant in Kharkhoda, Haryana, Maruti Suzuki has urged its supplier partners to build capacity with a strong emphasis on skill management amongst its workforce. “This year we will continue to work for growth, agility and flexibility,” asserted Maruti to vendors.
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