[niranjanprabhu]

Maruti along with the Korean twins of Hyundai and Kia today govern almost 75% of India's huge car market. One of the ways of understanding how they are doing with respect to one another is to analyze their product portfolio which though similar in many segments like hatches, are vastly different in others such as SUVs and MUVs

One of the best ways to understand the strength of the product portfolio of a company is not just to check its market share but also to look at how the market itself is growing. The Boston Consulting Group or BCG, came out with the BCG Matrix (which many of us would have studied in detail during our MBA days), which plotted products on a graph with market growth on the Y-axis and Market share on the X-axis. Then using logic which again can be argued and discussed upon, divided this into 4 quadrants.

1. The first would be products that are in a low growth market but hold a huge market share and are called Cash Cows.
2. The second are those products that are in a fast-growing market and also hold a huge market share. These are called Stars
3. The third are those which are in a high growth market but hold low market shares. These are called question marks!
4. The last would be to see products in a low growth market and also holding low market shares. Such products are called as Dogs

In the BCG Matrix that I have put up here, the size of each bubble is a reflection of the numbers sold in 2021 so far for the first 3 months. I have used this as I felt it was a fair indicator in a year that is expected to exhibit very high demand

Though we feel that the Indian car market is growing, actually in the last 3 years we have seen a slide contributed to by factors such as BS6 in 2019 and Covid in 2020. In all this gloom there have been segments of the market that have done very well and it has been that of the SUVs/Crossovers. At the same time markets that we take for granted and feel are doing very well like the 4 meter sedan are actually seeing volumes degrowth, most probably contributed to by the tremendous growth in the SUV segments.

I have taken the different body types of SUV, Hatch, MUV and Sedan and further classified them into Micro, Mini, Mid Sized, 4 Meter, Large, large & Premium (Like L&K), Utility and Electric. I have calculated the 5 year Cumulative Annualized Growth Rates (CAGR) for these segments.





Let us analyze what we see here through some salient points. Before that please note that I have added up Baleno and Glanza as well as Brezza and Urban Cruiser so that it correctly reflects the relative strength of Maruti products. Also bringing together Hyundai and Kia has been done given the fact that they share all the essentials that truly make a car and are different only at skin level. I am sure there will be disagreements on this and I humbly accept divergent PoV.

Some of my key takeaways for Maruti are
Most of their products are cash cows. This means they are in a market where the units are showing a CAGR of 10% right down to a negative 31%. At these levels Maruti has great market share but the returns will only dwindle with time until and unless certain serious changes are not brought in. IMHO these would be, bringing in turbocharged petrols, diesels and a better choice of automatics
1. For those who love the Swift, please note that volumes within the segment are degrowing at a rate of 7% YoY though the market share in this mid-sized hatchback is a whopping 65%.
2. The 4-meter sedan segment is degrowing at 11% and the Dzire stands tall over there with 53% market share.
3. Even their hit car, the Ertiga along with the XL6 is growing at just 5% and has almost the entire market to itself!
4. The WagonR is chugging along happily 2 decades or more after being introduced in our markets and volumes are almost steady with a degrowth of just 4%.
5. The 4 meter hatchback segment too is growing at just around 7% and the Baleno+Glanza own 53% of this market. The Tata Altroz is a serious contender here and will cause more pain when their DCT automatic will get introduced later this year.
6. The EECO is a great warrior that is soldiering on again for almost 2 decades in unchanged form and has a massive 62% of the MUV Utility market. The segment though is degrowing at 8%
7. The Alto which owns 95% of the segment soldiers on despite volumes degrowing at an alarming 15%
8. The Ignis is a mystery product which though owning 100% of the segment in which it is (KUV100 is gone), is having a degrowth of 28%!!!

Stars

The real star that Maruti has is the Vitara Brezza. It owns (along with the Urban Cruiser) 25% of a segment that is growing the highest at 51% CAGR. The sad story here is that it is precisely because of this segment that Maruti is unable to hold onto overall market share which has dipped by over 7% in the last year. Again the answers to how they could pose a challenge to the upcoming raiders as well as the now very well-established Korean Twins is something of deep debate! In my studies, I have seen that Maruti is very good in price segments that are below 10 lakhs and gets visibly uncomfortable the moment this limit is breached. The only exception begin the Ertiga/XL6

Question Marks

The S-Cross is in a segment that is growing at 18% but has the Creta and the Seltos for competition. Again, what are the remedial measures they have to take in order to make it big here, is an open debate.

Dogs

Surprise Surprise, it's the CIAZ. The segment is degrowing at a rate of 22% and Maruti holds just around a fifth of the volumes here.

Management Consultants look at dogs as those products that need to divested away from. Even if Maruti can increase its volumes here and take a larger bite of the pie, they can upgrade themselves into the cash cow territory!

Some of my key takeaways for Hyundai/Kia are

Cash Cows

1. The Grand i10. Though it looks like they have done a great job, the fact that volumes in the segment are degrowing at 7% makes it Hyundai's Star Cash Cow product!!!
2. The Verna has a 30% share in a market degrowing at 22%. Just hold on and make whatever moolah that can be raked till the party lasts.

Stars

1. Their BIGGEST stars are their SUVs today. Both the Creta/Seltos, as well as the Venue/Sonet command massive customer buy in and waiting periods, are slowly touching a year for some variants. This is a case study for competitors as to what to do. PERIOD. IMHO the hitherto unseen boldness displayed by the group (especially by Kia) in providing a wide wide choice of engines and gearboxes, coupled with a brilliant dash of features and styling added in, has made the day for the Korean Twins

Question Marks

1. Surprise Surprise, it is the Elite i20. In a market dominated by the Baleno/Glanza twins, a 21% share is not looking too good. Its actually a comparative/relative thing here. On its own merits, the car has done brilliantly well, the product has seen its market share crash from almost 60% in 2014 to the sad 21% that we see today, thanks to Maruti getting into this segment. Maruti is the King of the segment where pricing is below 10 lakhs and no one can reign happily over here forever. whether it Renault's Kwid which has been dominated by the S-Presso or Hyundai's i10 which has been overpowered by the Baleno. Tata's Altroz has hit Hyundai the most leaving Maruti unscathed!
Attaching the market share info here as this is very interesting


Dogs

Hyundai surprisingly has a couple of dogs in its manger and needs a lot of soul searching to get to the heart of the matter
1. Xcent/Aura - DISASTER with just 17% market share in a segment that is showing a volumes degrowth of 11%. I think the reason is a no-brainer. Its the design and looks. Engine-wise and autobox wise, I don't think they have any issues.
2. Santro. Going nowhere really with a 7% market share in a segment degrowing at 4%

[S15]

I'll be keeping a keen eye on the Upcoming Maruti Brezza with the rumoured 1.5 diesel engine.

If it is as boxy and large as the current generation, it will pull people away from both the Creta as well as the Venue/Sonet (which are the smallest sub-4m SUVs)

[GTO]

Awesome thread, Niranjan! Thanks for sharing. Will add to our homepage tomorrow .

Maruti is riding the "Maruti reputation" wave that is well-earned, no doubt, but in terms of technology, the company is on the backfoot. In fact, in terms of tech, the company is not only behind Hyundai-Kia, but also Tata IMHO. They are desperate for new technology from Toyota.

Originally Posted by niranjanprabhu

The real star that Maruti has is the Vitara Brezza. It owns (along with the Urban Cruiser) 25% of a segment that is growing the highest at 51% CAGR.

And this, despite being the oldest. Imagine what'll happen when the next-gen Vitara comes in a year.

Surprise Surprise, it is the Elite i20. In a market dominated by the Baleno/Glanza twins, a 21% share is not looking too good

I also feel that Hyundai has priced the new i20 a bit too optimistically this time around. That, and the controversial design language has got to be working against the car.

[TrackDay]

Originally Posted by niranjanprabhu

In my studies, I have seen that Maruti is very good in price segments that are below 10 lakhs and gets visibly uncomfortable the moment this limit is breached.

True ! From the Swift & Wagon R to the Ertiga is where MS runs on full steam with the brezza having the potential to breach the price bracket into the Creta segment. With the upcoming next gen Brezza one has to wait and watch the market response which will most likely be positive.

Originally Posted by niranjanprabhu

Their BIGGEST stars are their SUVs today. Both the Creta/Seltos, as well as the Venue/Sonet command massive customer buy in and waiting periods, are slowly touching a year for some variants. This is a case study for competitors as to what to do. PERIOD.

This platform is the goose that lays golden eggs for Hyundai. From the Creta/seltos to venue/Sonet this is where the middle class comes to shop. The Creta/Seltos is also associated with having made it in life and is commonly found in households with rising incomes.

Instead of everyone running the rat race, I feel manufacturers should focus on the next step which is the Harrier/Safari price bracket. The current Seltos/Creta owners will be looking at something bigger in 6-7 years time and that is where the next big segment lies for the future. Hyundai is already getting ready with the Alcazar. Seems like they are one step ahead !

[Nav-i-gator]

Good Analysis.

The only player that seem to be capable enough and geared up/dedicated to give a fight to Hyundai/Kia right now is Tata. They are establishing themselves in the current hot segment of CSUVs as well as future growth segment of mid-sized SUVs. HBX will expand the segment for them downwards and if they can quickly develop a Creta/Seltos competitor (either a larger Nexon or even better - a Sierra), it would cover them for a long growth trajectory.

Maruti will continue to rule the entry level segment. That segment might remain stagnant, but is sure a cash cow for them. I don't think they have anything worthwhile in segments above CSUVs, maybe Grand Vitara and maybe they can have a good shot at lifestyle segment with Jimny, but that's it.

[niranjanprabhu]

Originally Posted by GTO

And this, despite being the oldest. Imagine what'll happen when the next-gen Vitara comes in a year.

Also the Jimny. My take is that external looks is one if not "the" top attraction for potential car buys in India and even globally. Though news suggests that the same old tired powertrains and auto boxes will be employed here, the awesome form factor and looks may ensure that these weaknesses are overlooked. Also if the 1.5 diesel is re-introduced, this will be a runaway hit.

Originally Posted by GTO

I also feel that Hyundai has priced the new i20 a bit too optimistically this time around. That, and the controversial design language has got to be working against the car.

The use of very high end GDI engines and DCT autoboxes have contributed big time to the higher pricing. This is where Hyundai could have actually created a separate brand for the high powered engines like the N Series, made design tweaks to the plastic parts like headlamps and bumpers and even reported their sales separately. Bunching all of them as the Elite i20 automatically makes customers look at the price of the highest trim levels, compare the same with a Baleno or an Altroz, and come to wrong conclusions. Yes the design quality in terms of how it looks is not a chip on the earlier i20 which was stunning

[ZenMaster]

If Tata can release the HBX without niggles and if its atleast 80% as good looking as the concept, they'll hit it out of the park. Tata's reputation as an SUV maker will play to their strengths especially when it comes to perception. (Even though we all know its not an SUV). This is one of the hottest segments now and Tata needs to get into it while it is hot.

And as I have said earlier, the Tata Safari will sell a lot of cars for Tata. Its a proper Halo product for them.

Only hope is that it doesn't end up looking weird like the KUV or Espresso.

[shivs2003]

This is a great article my friend.

The analytics/data reminds me of my MBA days.

Also, it reinforces the general point in the auto sector, that despite MSIL having fantastic volumes, they long term strategies are too conservative. I feel Hyundai/Kia will be an even MORE aggressive company once they move to their other long - term ideas, namely:

1. Hyundai - Genesis brand vehicles (they will be the poor man's Mercedes, everyone in India loves a VFM bargain, they will get that with Genesis. Example, how Ciaz ate into Civic's/Corolla's marketshare)

2. Hyundai/Kias SUV jump - The fortuner is the king of the hill in this area. I feel only Honda (Pilot) and Hyundai/Kia (Palisade/Teluride) can be a good competitor.


Adding to your analysis, I also feel Honda is simply walking away from the market. The company had wonderful offerings 10 years ago, they seem have lost all vision/long term thought. Despite having great models worldwide, they don't bring any of it to India.

[ajmat]

Originally Posted by niranjanprabhu

Maruti along with the Korean twins of Hyundai and Kia today govern almost 75% of India's huge car market. One of the ways of understanding how they are doing with respect to one another is to analyze their product portfolio which though similar in many segments like hatches, are vastly different in others such as SUVs and MUVs

Great analysis, although Maruti has significant presence and share. The overall operational efficiency and profitability gong goes to Hyundai/Kia

Originally Posted by TrackDay

This platform is the goose that lays golden eggs for Hyundai. From the Creta/seltos to venue/Sonet this is where the middle class comes to shop. The Creta/Seltos is also associated with having made it in life and is commonly found in households with rising incomes.
!

This is the reason why!! One platform, two sizes, huge economies of scale and sharing of supplier base. Behind the scenes, Hyundai runs the supply chain. during a recent drive upto the Kia factory , fellow mod Vid6630 and I noticed , Hyundai had embedded departments within the factory and a lot of TN-22 cars around the place.

Maruti have too many varieties. They have the volume but not the profits to ensure cutting edge R&D

Originally Posted by GTO

I also feel that Hyundai has priced the new i20 a bit too optimistically this time around. That, and the controversial design language has got to be working against the car.

Not sure if controversial, more just plain bland with zero presence. The i20 looks too "cheap" for its segment. Read design is bland.

[bhpfaninblr]

Good thread Niranjan.

GTO put it correctly that Suzuki is facing the heat for not enough spend on R&D. They have also prioritized short-term over long-term. They made some assumptions that have hit their market share. Instead of providing customers what customers want, they started assuming what customers should want like 'no diesel engine', 'no turbo petrol' etc.

Biggest challenges for Suzuki to regain market share:
- A competent diesel engine
60% of Creta/Seltos sales are diesel. They need the BS6 version of the 1.5 Diesel. That engine produced only 95 BHP but had a FGT. Even the same engine in the Brezza, Ciaz and S-cross with a BS6 version would increase sales
(A VGT could add 10 BHP at-least). Without a diesel engine, this market is simply going off
- Not manufacturing 1.0 Turbo and 1.4 Turbo engines in India
- Total absence in D1 segment
They need the Vitara in India. Along-with Tata, they have the agreement with Fiat to source the 2.0L Diesel. So that should be a good option for the Vitara
- Lack of a 6-speed AT
The 4-speed AT in Ciaz and S-cross is dated and from the Stone age
IMO, the biggest problem that Maruti is facing is the technology regarding diesel engine and auto gearbox. Depending on Toyota is no good when we look at the types of gearboxes and engines they have made available in India

[fhdowntheline]

I think MSIL needs a good product in the Seltos/Creta category and that too with an engine better than the 1.5NA petrol. I think the future for diesels in sub-15 lac cars is a big question mark. Hyundai/Kia are the only prominent diesel car makers in this category. Others have exited it completely. Then again, its only the CSUV range where the Korean diesels are selling well. I am sure that for the hatchbacks and sedans in the Hyundai lineup, petrol dominates the sales chart.

[ph03n!x]

Leadership.

The guy at the helm of affairs at any org has a span of influence that, is halo level, will succeed him - but will eventually wane off if the org didn't/ couldn't find a worthy successor.

Maruti has a halo that's unmistakably the strongest, yet it's showing its limits - albeit gradually. They'll eventually wake up before their halo diminishes, with strong next gen (EV/ Hybrids). They have enough goodwill to falter for another 5 years at least.

Hyundai's halo is showing its weakness oh-too-soon, though it'll ride this wave out on the back of its stars. i20 established Hyundai as a true, premium brand. They'll salvage this brand in 3 years with a refresh, or maybe 5 with a platform upgrade - right now, they can afford this.

Those who should be more on toes are the Tatas, Mahindras, Renault-Nissans and the VW. And FCA.. err.. stellant.. yeah, them. While the first two have an admirable following, and the others don't have that either - markets don't get supported by fans.

[CountMe91]

Include option for 6 Speed TC gearbox or option for DCT for premium cars of Maruti like Swift, Brezza, Baleno, Ertiga, XL6 and S-Cross and see how Maruti regains and eventually increase its foothold in the Indian automobile market. Reliability, after-sales, resale always have been Maruti's USP. Things where they need to improve are: providing safety features, update interiors, AT technology and diesel engines.

[Arun_S]

Originally Posted by GTO

I also feel that Hyundai has priced the new i20 a bit too optimistically this time around. That, and the controversial design language has got to be working against the car.

Adding to this, it is my opinion that the launch of CSUV's like Magnite/Kiger didn't help their case either. Lot of people get a feeling 11 L for hatchback vs 7-8 L for CSUV. For them it is plain price comparison, engine options don't matter.

[Carma2017]

Suzuki as a company has always known it's limitations and has operated accordingly to its strengths. Hyundai as a group is a giant and has deeper pockets than what Suzuki can even dare to imagine. So, naturally R&D spend comparison will never be favourable to Suzuki.
What Suzuki excels in is low cost technology - Bringing hitherto higher segment tech into their strength zone of sub 10 Lac category (not always with precision execution though!!) So, if you get all features you desire in lower cost cars, why would you want to buy a higher cost car?
This philosophy has worked for Suzuki in fending off global giants till date but there is a limitation. As the customers get more affluent and are ready to spend more on differentiating themselves from their peers, Suzuki's appeal to common sense falters. Hence the success of brand KIA with its premium appeal. This feeling of Suzuki falling or lagging behind has been exaggerated by absence of big launches even as other OEMs are launching slew of new models. As has been shared in many threads within our forum, Suzuki has a huge product and power train refreshal planned in next 2-4 years culminating with launch of EVs. As far as I know, they have taken a very calculated gamble, depending on Suzuki brand reputation, to tide over 2 years without new launches even as Suzuki internally strives to develop new affordable tech for its target markets. Whether the best laid plans will play out as they hope is something that time will tell.