Maruti targets 16,500 Monthly Sales for New Baleno, Sharpens Premiumisation and Nexa strategy

Maruti Suzuki is betting on the new Baleno to sustain its stronghold in India’s premium hatchback market, with the company aiming to build on its current run rate of nearly 16,500 units a month while simultaneously rejigging its Nexa strategy to drive customer upgrades.

Launched at a starting price of Rs 6.09 lakh, Maruti looks to make the premium hatchback more compelling to aspirational buyers. "Baleno accounts for roughly one in every three premium hatchbacks sold in India but we feel the need to offer its target customer some more features," Partho Banerjee, Senior Executive Officer, Marketing & Sales, Maruti Suzuki India said.

The new Baleno gets a significant feature upgrade, including ADAS level 2, which is a first for the premium hatchback segment. The company believes the additional technology and features will appeal to a more aspirational customer base that it expects to upgrade to larger and more premium vehicles over time.

The new Baleno is central to Maruti’s strategy of strengthening its premium hatchback offering. The premium hatchback segment accounts for around 50,000 vehicles a month, or approximately 600,000 units annually.

"The features which are generally there in the very premium segment of the vehicles, we are offering it even in the premium hatch. The logic is very simple. The segment of customer to whom we are targeting to, we are investing in that because in times to come, they are going to be the one which they are going to upgrade themselves," he said. 

The Baleno launch, according to Banerjee, gives Maruti an opportunity to strengthen the Nexa channel, which was created 11 years ago to cater to an emerging set of customers looking for a more premium retail experience. “We are also moving to new different programmes. So, we are reworking on customer loyalty programs,” Banerjee said.

The company is working on managing the repurchase cycle more systematically, allowing customers to move to the next product based on their evolving needs. The company, he adds, intends to create upgrade pathways within both channels while also allowing customers to move between them. “If someone is buying the WagonR, he can go to a Brezza. After Brezza, he can move to Victoris. So, we have the upgrades within the channels also,” Banerjee said. Within Nexa, a customer buying a Fronx could move up to the Grand Vitara and eventually to the e Vitara, he said.

Banerjee, who was part of the initial team that set up the Nexa channel, also said Maruti created Nexa anticipating the emergence of a new generation of customers who would seek a different retail and ownership experience. Maruti currently has 17 models under the Nexa channel, with its EV portfolio also now entering the channel.

Hatchbacks hold their ground

While SUVs now account for around 57% of Maruti’s sales, Banerjee said the company's strategy is not to abandon hatchbacks as India remains a diverse market with different customer requirements. "Customers buy SUVs as they desire for a larger vehicle and more space, the perception of greater road presence and the higher seating position but India is a big market and there are different sets of customers,” he said.

Maruti's recent sales, he argued, demonstrate that hatchbacks continue to have substantial demand. The Baleno sells around 16,500 units a month, while the Brezza did around 17,000 units last month. The Swift also sold close to 20,000 units, while models such as the WagonR and competing small SUVs are operating at similar volumes. The premium hatchback segment is also growing faster than the overall industry.

While the industry is growing at around 17%, Maruti says the premium hatchback segment is growing at 28%. Banerjee expects the premium hatchback market to remain around the 600,000-unit level this year, with the festive season potentially providing an additional boost, although vehicle availability remains an important factor.

Maruti has also seen stronger growth across segments this year as additional manufacturing capacity has come on stream. “I think the biggest factor for this year is that we commissioned two of our lines. So, we started getting more vehicles. There was no two reasons that why could we have done better, but we were short of capacities. With the ramp up happening, the more we are getting the vehicles, we are able to more push our market share up," he said. Maruti currently has a backlog of around 1.8 lakh vehicles.

Maruti expects industry to reach 5.4 million units

Looking ahead, Maruti expects the Indian passenger vehicle industry to maintain strong absolute volumes through the festive period, despite a likely moderation in year-on-year growth due to a high base. Banerjee expects monthly industry volumes to rise from the current 4.3-4.4 lakh level, translating into an annual market of around 5.3-5.4 million units.

He cautioned, however, that commodity prices and other potential headwinds could affect the outlook. Automakers have already been raising prices as commodity costs rise, but Banerjee said the market has so far absorbed the increases. Maruti also has a new product planned before the end of the calendar year. "The festive season will support volumes, but the year-on-year growth rate could appear weaker in October because of the unusually high comparison base created by the timing of last year's GST-related retail sales," he said.