Maruti Suzuki sees robust SUV sales growth, yet strives for more. Here's Why
Maruti Suzuki, India's largest carmaker, just clocked its highest ever sales for a financial year (FY) in FY 2023-24 with sales of 17,59,881 units. This is higher by 9.5 per cent over the last year’s 16,06,870 units sold. The growth can largely be attributed to the company’s growth in the utility vehicle (UV) segment.
While Maruti managed to sell 3,66,129 UVs which includes the likes of the Brezza along with Ertiga in FY 2022-23, in FY 2023-24 the company increased its UV sales by a whopping 75.4 per cent to 6,42,296 units. But is this enough by the high targets Maruti Suzuki set for itself?
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In a recent press conference held in Delhi, Shashank Srivastava, Executive Committee Member, Maruti Suzuki India, expressed his views. “SUV is one area where we have to work to get to our target." For a considerable period of time, the company banked on only one SUV model, Brezza, to take on the ever- growing SUV segment. However, since 2022, Maruti has been consistently focusing on growing its SUV range. Interestingly, since 2022 the company has launched eight models out of which six were either SUV or MPV (Multi purpose vehicle).
The idea here was to target at least 25 per cent of the SUV market which would lead the company to achieve its previous high of 50 per cent of the over Indian passenger vehicle industry. Maruti's once-dominant position began to falter in FY20, resulting in its market share dropping to 43 per cent two years later. The shift in customer preferences towards SUVs left Maruti with limited options to offer as competitors capitalised on the changing market dynamics, intensifying the competition. However Maruti still remained the market leader.
Also Read : SUVs and MPVs help Maruti Suzuki clock 15% jump in car sales in March
While Maruti was hoping to claw back 25 per cent of the SUV market with the new models, it has achieved 21 per cent as things stand in FY 2023-24. Meanwhile last financial year, the company’s SUV market share was at 18 per cent while a year further back it was only 11 per cent. During the year, Maruti also witnessed the Fronx crossing one lakh sales in just 10 months since its introduction, making it the fastest SUV to reach this milestone. Prior to the Fronx, the record was held by the Grand Vitara, which achieved the feat in 12 months.
Interestingly, even with this growth, the company has seen a further downfall in the market share to around 42 per cent.
The peculiar case of Jimny
One of the reasons why Maruti is still falling short of their expectations is the Jimny. While there was a huge fan calling to bring the Jimny to the Indian shores, the story is a far cry from what was expected. Maruti has been struggling to sell Jimny even though it claims that it is a rather niche proposition. The vehicle has barely crossed the 200 units sales mark in each of the past several months.
However, Maruti Suzuki India remains resolute in its decision to sell the Jimny as is. According to Srivastava, the company is steadfast in maintaining the true identity of its four-wheel-drive off-roader, the Jimny, despite the potential for higher sales. While there has been a demand for a two-wheel-drive variant, Maruti Suzuki India is unlikely to introduce one, as it is keen on preserving the brand identity of the Jimny.
Srivastava acknowledged that offering a two-wheel-drive variant could increase sales slightly but the company has chosen not to compromise on the global identity of the brand for this reason. Initially, the Jimny met the company's expectations, selling around 2,500 units per month. However, sales have declined in recent months.
The segment where the Jimny sits has an annual sales volume of approximately 45,000 units, making it a niche segment with few competitors. At launch, the Jimny received a booking lineup of 40,000 units, with 55 per cent of the demand coming from the automatic variants. Due to supply constraints, the company was unable to produce enough automatic variants and focused on manual transmission options instead. This resulted in an excess production of manual transmission models.
To clear the excess stock, Maruti Suzuki India introduced heavy sales promotions in the last calendar year, offering discounts of up to ₹2 lakh. This led to sales of about 5,000 units of the Jimny in December. However, once the discounts ended, sales dropped by about 78 per cent to 163 units in January 2024.
Also watch: Maruti Suzuki Jimny SUV: First Drive Review
Hatchbacks still a strong contender
While the SUV segment has witnessed remarkable growth for both Maruti and the industry, contrasting sharply with the significant decline in the hatchback segment, which was once Maruti's mainstay. In FY 2021-22, hatchbacks accounted for about 45 per cent of Maruti's total sales, but this dropped to 36 per cent in the last financial year, and further to 28 per cent in FY 2023-24.
Despite this decline, Srivastava expressed confidence in the continued relevance of hatchbacks, particularly given India's young demographic, with 65 per cent of the population under 35, higher disposable incomes, and inadequate public transport, all factors driving demand for affordable mobility solutions.
Interestingly, the WagonR emerged as the best-selling vehicle in FY 2023-24, with sales exceeding two lakh units. Srivastava attributed the decline in the hatchback segment primarily to affordability, noting that while potential buyers' incomes have increased slowly, vehicle prices, driven by rising commodity prices, have risen much faster, making entry-level hatchbacks less accessible.
Another factor contributing to the segment's decline is the aspirational nature of customers, who increasingly prefer entry-level sedans or SUVs that align with their personalities. RC Bhargava, Chairman of Maruti Suzuki India, has emphasised that sustained industry growth depends on revitalising the entry-level vehicle segment, as real growth will come from two-wheeler owners and first-time buyers entering the market, who are primarily attracted to entry-level offerings.
Looking ahead, Srivastava expects the contribution of hatchbacks to stabilize at around 25 per cent, with annual sales of approximately 1,00,000 units, indicating a long-term strategy for Maruti Suzuki India.
