Hatchbacks continue to lose ground at Maruti Suzuki as SUVs scale new peak
For the first time ever, Maruti Suzuki is likely to witness more than half of its sales from non-hatchback space, company's SUV market share has grown to over 20% in Q1 of FY24, and it is set to go up to 25%.
With the rising volumes of SUVs, Maruti Suzuki, the country's largest car maker, will see the share of hatchbacks - its core pillar - drop below 50 percent for the first time ever this fiscal year. And this would mean, the share of hatchbacks for the overall market would also have dropped to a third of the passenger vehicle market in FY24.
For Maruti Suzuki, the hatchbacks contributed almost 65 percent of its total sales a decade back, this year it is likely to slip to 47-48 percent of its overall sales - underlining the accelerated shift in favour of SUVs, and the market leader too is aligning in that direction.
This drop is almost 10-11 percentage points or 1,100 basis points from a 59 percent share last financial year. Whereas at the same time, the SUV contribution is likely to more than double to 25 percent in FY24 versus a 12 percent share in the previous financial year for the market leader.
Shashank Srivastava, Senior Executive Officer, sales and marketing at Maruti Suzuki explained that over the last few years, the growth in the SUV segment has outpaced other segments, and this has resulted in almost 43 percent of the PV sales being SUVs, up from about 20 percent a few years back.
"The Hatchback segment for various reasons including affordability and regulatory stringency, has reduced to 33 percent of the market from around 45 percent. Maruti Suzuki has a 65 percent market share in the non-SUV segment, but its relative lower market share in the SUV share coupled with the larger SUV segment share has put pressure on its overall share. As a strategy, therefore, it was clear that the company has to strengthen its SUV portfolio. This is exactly what has been done and this has resulted in a larger market share in the SUV segment and hence overall share as well," added Srivastava.
The quantum of price increase in the hatchback space has been to the tune of almost 15-20 percent over the last few years, whereas at the same time the per capita increase in income for the bottom end of the pyramid, especially smaller towns and rural areas has not grown in line - which has led to subdued performance for the hatchback segment, which is predominantly positioned in Rs sub-10 lakh market.
The lower one goes on price points, the lower is the share of volumes in the market. Of the 53 percent total hatchback sales at Maruti, about 27 percent share is from premium hatchbacks Swift, and Baleno, 16 percent is mid hatch (Celerio, Wagon R) and 10 percent is entry hatch (S-Presso and Alto).
The upcoming safety norm of 6 airbags is also likely to swell prices further, which may pull down the share of hatchbacks.
Due to rising costs and falling industry volumes, the number of options in the hatchback space has almost halved, with Maruti Suzuki continuing to rule the roost with over 65-70 percent market share, with Hyundai and Renault consolidating their respective portfolio to have limited presence.
Srivastava says, going forward, the sales of the hatchback segment depend on how quickly the income level of the consumers goes up. Last year, the overall sales of this segment interestingly increased over 20 percent to 13.4 lakh, and it is still below the highs of 15.58 lakh the industry sold in FY18.
The head of sales and marketing at Maruti Suzuki predicts that this segment would remain flat, and the total hatchback share is likely to drop from 34 percent (current volume) to 32 percent by the end of the year.
“This segment can come up later because the Indian demography is quite young 65 percent (below 35 years of age). First time buyers constitute about 45-47 percent, and we believe the personal mobility requirement will continue to grow due to the lack of public transport. Our 2030 prediction - in absolute numbers is that it may go up to 15.4 lakh on an industry level. However, the share should come down to 26-27 percent in the long term,” said Srivastava.
The launches of the entry SUV took a sizable chunk of hatchbacks and entry sedans from the marketplace. While SUV sales have more than doubled in the last 5 years to over 1.5 million, the hatchback volumes are likely to drop to 1.2 million.
Number Two SUV maker in Q1 FY24
Srivastava stated that for Q1 FY24, the SUV market share of the company was just above 20 percent as against 12.1 percent in Q1 FY23.
"Looks like we are on our way to achieving 24-25 percent market share in SUV this financial year, and to be the number one SUV manufacturer in the country. In this quarter we are at number two, just behind M&M," added Srivastava.
The company is sitting on pending bookings of over 3.9 lakh units, out of which almost 50 percent are SUVs. The cumulative bookings of Jimny and Fronx are just under 1 lakh.
Srivastava is confident of grabbing the number one SUV maker spot in terms of volumes by the end of the year.
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