Why RC Bhargava says Maruti Suzuki is losing market share is somehow a good thing, Auto News, ET Auto

RC Bhargava, Chairman, Maruti Suzuki India Limited

New Delhi: For India, with Maruti Suzuki (formerly Maruti Udyog) started a large-scale mobility phase with more affordable and reliable small cars 40 years ago. This helped the OEM achieve the number one position by a wide margin. However, with growing competition and changing customer preferences, OEM saw its enviable market share of over 50% drop to an 8-year low of 43% in FY22.

While this may be a cause for concern for the company, it’s also a good thing, says RC Bhargava, president of Maruti Suzuki. “I think it’s good in a way because it takes us out of that comfort zone and makes us work a little harder to come back,” he said during a media interaction on the OEM. crossing the milestone of 40 years.

Even after the erosion of market share, Maruti Suzuki is the market leader with a large margin of more than 25 percentage points over number two. This level of business leadership could also lead to complacency, and that’s what Bhargava says Maruti Suzuki will have to avoid at all costs.

“If you start thinking that I’m number one and I’ll always be number one, I have nothing to do, then I think you won’t be number one for very long,” the octogenarian industry veteran who has joined Maruti. Suzuki (then Maruti Udyog) as an OSD (special duty officer) in 1983, said, possibly also as advice for his company.

One of the main reasons for the reduction of Maruti Suzuki’s dominance in the Indian passenger vehicle market has been the growth of the SUV segment. The wave of SUVs has seen this segment grow from less than 14% in 2015 to 40% today. Brezza, the OEM’s only SUV model, will be joined by the Grand Vitara next month.

This addition should help Maruti Suzuki regain market share. While this may be reason for Maruti Suzuki to rejoice, Bhargava is concerned that a large population’s dream of owning a car is becoming difficult to achieve. The upward trend in car prices, also due to regulatory costs, rising fuel prices and rising interest rates, has a negative impact not only on small cars, but also on the lower part of the two-wheeler market.

“Concerned” about the move where the small car market is “squeezed” while larger vehicles are seeing a growing trend, Bhargava said: “I don’t like a situation where the large masses of people who for decades, have aspired to who progress see their dreams recede.

As for the impact of the trend on Maruti Suzuki’s market performance, Bhargava said: “It is not a major concern as it is moving towards the larger vehicle segments, although it is “a bit in delay”, to maintain its market share and profitability”.

The most important factor that Maruti Suzuki is betting on for the sustainability of the company, aside from the products, is “India’s consumer”. After all, growing demand from Indian consumers has helped the OEM go from selling just 852 vehicles in 1983-84 (December to March) to selling 1.36 million units in 2021-22.

Batting for the incentive of all new technologies

As the industry moves towards the era of electrification, Maruti Suzuki has no choice but to enter the electric vehicle space. This is a space where the cost of technology would make it extremely difficult for Maruti Suzuki to maintain its “affordable mobility” pitch.

Suzuki’s INR 10,400 crore investment plan for manufacturing EVs and EV batteries is expected to help Maruti Suzuki meet this challenge to some extent.

On Sunday, the Prime Minister will lay the foundation stones for two key Suzuki Group projects in India: Suzuki Motor Gujarat EV battery manufacturing plant in Hansalpur, Gujarat and Maruti Suzuki’s upcoming vehicle manufacturing plant in Kharkhoda, Haryana.

The facility in Hansalpur, Gujarat will be set up with an investment of around INR 73,000 crore to manufacture advanced chemistry cell batteries for electric vehicles.

Bharagava is in favor of petrol and diesel vehicles being discouraged. At the same time, electricity should also not be seen as the only technological solution to clean mobility.

His argument is based on India’s average purchasing power, which is lower than Western countries, and the still untapped growth potential of ICE (internal combustion engine) vehicles here.

The push for other “middle-range” technologies such as hybrids and CNG is what Bharagava is fighting for.