[Samba]

The market has moved on.
During the 90s Maruti was an instant hit when they provided cars to the Indian middle class. The fuel efficient and reliable cars which were better than the Fiats and the Ambys of that time filled the Indian roads. The Zens and Esteems were used by the upper middle-class.

But with time other manufacturers gave us better cars with more features, safety, power, reliability yet fuel efficient.

People have moved on from the entry level cars to the above segments. Now people value for safety. Customers are ready to pay 2Lac more to get a 4* or 5* gncap rated cars. Road trips are now much more popular than it was 10 years back. Everyone wants to ferry their family with more comfort and safety.

Hyundai brought the N-line, Tata got the Altroz turbo, but whats stopping Maruti from bringing the Swift sports? Even after VW stopped producing the Polo TSI, customers miss that car.
The Thar is having a long waiting period whereas the Jimny is still an illusion!

The only silver lining of Maruti is their JV with Toyota. This can get them some good hybrid engines in the future whereas Toyota can be benefitted by the less production cost, if the cars are manufactured in Maruti plant.

Another company must learn from the mistakes of Maruti is Renault! They cant survive for long with their basic Kwid and Triber.

Kudos to Tata, Mahindra, Hyundai/kia for their effort and perfect analysis of the Indian market.

Even HM was once the king of the Indian market, if you do not update your product line up, you will be in trouble. People are ready to pay for a good product.

Maruti has it all ready, the brand value, the resale market, service centres in every possible locations. Just get the right product at the right time.

[greenhorn]

As much as we would want to accuse Mr Bhargava of living in an ivory tower, I think we should hold up that mirror up to ourselves. Maruti as a company is able to look past all the virtue signalling and Identify what Indian Customers really want and use that to get consistent Y-o-Y growth. Most of us are not comfortable with the truth of what the indian market wants, hence the Denial and outrage.

Ideally Maruti would like to continue selling cars identical to the ones from 10- 20 years ago with some stickers and LED DRL's but things like safety and Emissions regulations have driven up costs while at the same time creating a formidable competitor in the name of used cars which are actually a superior product for entry level customers( as none of these newer regulations add anything that they perceive as value. Covid or no Covid, the Indian car market changing from a Pyramid to a Diamond was something that started a long time ago when the alto overtook the M800.

I Think he is just lamenting the fact that a lot of people who would have bought an alto at 2.5L, now look at the same car bloated to 4L because of emissions, safety, and taxes, and simply say no because they see no value in it. While I think NCAP etc are doing great work, making random safety features mandatory makes no sense if that results in someone deciding not to buy a car, and riding a motorcycle instead. He is concerned that they are not able to serve that segment. Hopefully some of them bought used cars instead, but there is still a segment of the market that is lost to two wheelers. I don't think he is worried too much about it - As a Company, Maruti, along with other manufacturers have found that given these constraints, the higher segments are the key to success, and have moved on and are thriving, but these consumers have been given a raw deal by well intentioned regulations.

Maruti's obituary has been written several times before, and It has outlived all of them. I'm not a fan of current maruti products either, but have to give them credit where it's due.

[Durango Dude]

Basically, Maruti has been resting on it's laurels too long. It's so well ensconced in it's comfort zone that it's almost in a slumber doing what it does best and selling mind boggling number of affordable, reliable and fuel efficient cars that it has failed to innovate or progress beyond and take a step to side that may barely be called 'adventurous'. Competition in the form of Kia are catering to a whole different clientele most of whom Maruti is loosing due to it's attitude. They should at least get their funky looking Kei cars from Japan to our shores and sell them through either NEXA of some other outlet. Maruti is trudging on like a 'horse with blinders'. R C Bhargava is senile and must be replaced with someone more dynamic and with a little imagination with which to reposition the brand on the path that sees it succeeding in the Rupees 20L bracket and beyond too...Maruti must strive towards becoming an aspirational brand not the brand that you buy when you can't afford anything else...

[nitkel]

While Maruti is no saint and has fallen behind peers, what he is indicating is not completely untrue.

The 2 wheeler market has seen a steep fall in sales, and it is indeed due to lack of sufficient income generation at lower levels.

This will eventually affect white collar jobs too!

[headbanger]

Irrespective of reasonings that Maruti or for that part any manufacturer gives, the market is rewarding those who are bringing in products that vibe with pulse of the customer.

Churn of customer preferences will always be there, sometimes it's an undercurrent while being obvious on other occasions. Just as an example, how many options do you have in a safe automatic hatch today within 10L?

I agree on the disappointment with the way government is bringing in changes in automotive ecosystem since it lacks continuity and predictability on roadmap ahead. But it's absolutely rubbish if someone says that the overall market is shrinking in the longer term. To me, it's saying like exam was difficult because I wasn't prepared.

[Carma2017]

Originally Posted by headbanger

...

I agree on the disappointment with the way government is bringing in changes in automotive ecosystem since it lacks continuity and predictability on roadmap ahead. But it's absolutely rubbish if someone says that the overall market is shrinking in the longer term. To me, it's saying like exam was difficult because I wasn't prepared.

The market has already shrunk. From a prediction of 10 million vehicles sales in 2030, we are already down to 5-6 million market size in latest predictions. It will shrink further if Government decides EVs are the only way further. I remember our honorable Minister mentioning in a ceremonial lecture at ARAI, that there are just too many vehicles on Indian roads and we needed to do something about it. Interestingly, if you look into the pre owned car sales, it is growing at a diametrically opposite pace. Is that good? I don't know. But it certainly does not help the cause of safer and less polluting vehicles which Government wants to achieve.

[shortbread]

Originally Posted by androdev

The country is not producing enough new kids - people whose income levels have gone up to buy and afford to run their first basic car. The few who make enough money to buy their first car, esp in metros, they are skipping the nursery section altogether and going directly to higher grades. This is a relatively small number in a macro economic sense.
.

It's true the world over, income disparity is increasing rapidly.

People with good stable incomes, asset owning class, financially astute benefitted from the global quantitative easing. More liquidity, lowest ever interest rates and inflation simply means their assets are more valuable and they're richer.

On the hand people who survived month to month, daily wages, insufficient savings saw themselves grow poorer. Rapid inflation made things worse.

The former do not find Maruti desirable anymore and fewer are interested in having one on their driveway. The latter cannot afford new marutis.

[AZT]

This actually came just after I read that fresher salaries for IT companies have stayed the same for over 8 years now, and even before that it seems. Maybe buying your first car early on after getting a job used to be a thing but I don’t see that happening much these days.

Petrol price hike just made things worse. Inflation is like a flat tax on everyone and car purchase decisions are being pushed to later on in life.

[guru_max]

Originally Posted by Carma2017

It is a fact that even Japanese government is no longer enamored with the micro sized Kei cars. The taxation advantages have almost disappeared for the Kei segment in Japan. The government here wants to push the Japanese makers to make cars that can be sold globally. So, Suzuki after this double assault of Indian and Japanese governments has no chance if it does not play the big car game.Small cars have had their time under the sun and in future (2-3 years later), we should not be surprised if the cheapest car in India is the Wagon-R or even the Swift. It just does not pay to make a small car anymore. Mr Bhargav has to live with that reality. His reminiscence is now getting repeatative and no one really buys it anymore except as sour grapes rants, no matter if there is truth in his mutterings.

If the market moves upwards, then that only proves Mr.Bhargava is making. The spending ability of the population hasn't kept up with the pace as it is and if the lower end segment goes away, Maruti is the biggest loser. Criticisms on Maruti is mostly fair, they only have themselves to blame for not moving up the value chain. It may not be healthy for the industry if this trend continues.

[Vishal.R]

How this co-relates with decision by Maruti to discontinue base versions of Alto / S-Presso?

Also in reality MSIL (Indian publicly listed company paying Indian taxes) is always fed just bread. butter (royalties paid for so called "technology") is for Suzuki Japan only.

They are enjoying one of the highest margin in Industry.

Also He must be frustrated by recent emphasis on having some of the safety features as standard which also results in safety gets limelight something He won't prefer.

[Kln]

Originally Posted by padmrajravi

Well, XL6 is not aimed at the target group he mentioned. The segment he mentioned is the one that has just saved enough to upgrade from two wheeler to a car. None of them are thinking about XL6. Suzuki has not increased the prices of Alto segment significantly.

They have. The Ignis launched in 2017 at 4.6 ex showroom, and is now 5.2. This is for base model, which very few will purchase. The Zeta model on road Ahmedabad in 2017 was 6.1 and is now 7.2. The Swift 2018 face-lift ZXI+ was the nearly 7.8-7.9 on road Ahmedabad, and is now 9.1. Imagine paying 9 big ones for a Swift! And that too MT.


As far as upgrading from 2 wheelers is concerned, I know a lot of middle class families who have bought these 2 cars as their first car.

Maruti prices are also through the roof, and they continue to milk the middle class on absence of any serious competitor in the price range. Thanks to Tata and their aggressive Altroz, Punch and Nexon launches, Maruti now has started releasing cars with more than barebones facilities and features.

Originally Posted by greenhorn

.. things like safety and Emissions regulations have driven up costs..

I Think he is just lamenting the fact that a lot of people who would have bought an alto at 2.5L, now look at the same car bloated to 4L because of emissions, safety, and taxes, and simply say no because they see no value in it.

Maruti's obituary has been written several times before, and It has outlived all of them. I'm not a fan of current maruti products either, but have to give them credit where it's due.

No consumer should fall for this propaganda that emission norms are the reason prices are going up. All manufacturers are earning FAT profits even in current scenario. All of them had adequate time and heads up to make new engines. Companies do not want to let go of even a single paisa of your hard earned money, and that's why they keep jacking up the prices of their products. To progress towards safer, more environment friendly cars should not be looked down upon as a cause for rising costs.

In related news - https://www.timesofindia.com/busines...w/91177935.cms

[COMMUTER]

I feel that this has something to do with the crash norms that are always imminent for quite sometime now. Once it kicks in, most of what Maruti sells will go out of production and those who had invested in researching safety would be at a huge advantage. He seems to be hinting at the day Maruti's crash tested cars being out of reach of the middle class and grooming the masses to be prepared for their higher priced products to get overpriced by a higher margin.

[ron178]

Originally Posted by Carma2017

The very fact that other OEMs like Suzuki did not latch on to the NCAP bandwagon is nobody else's fault but their own.

The way Maruti Suzuki resisted made the GNCAP frontal offset test seem very hard or important, which it's really not. Bhargava's hostile PR statements just made competitors look better. They should learn from Toyota how to respond to a (rare for Toyota) low rating although I hope there'll be no more of those.

The priority order for improving safety normally is protecting critical body regions (survive the crash) = safety assist technologies (prevent the crash) > protecting noncritical regions (walk away from the crash). But noncritical regions (knee-femur-pelvis, tibias, feet) form half the GNCAP score and IMO they are a bit of a luxury considering the bad situation of the second and even the first (in side impact) in Indian cars. Take the Maruti Ertiga for example, which had decent protection for critical body parts but lost points for the feet. In theory no more likely to cause serious or critical injury to a crucial body part in a frontal crash than a higher rated Renault Triber or even a Mahindra Marazzo, and it also has optional ESC.

Originally Posted by Carma2017

fearmongerer-in-chief GNCAP

Vehicle safety in India today is more emotion than anything else. Disappointment at "not getting the real deal structurally" makes it seem like a car has much worse crashworthiness (often not the case) and also puts more important safety technologies on the back burner. This 'scaremongering' you speak of has been a trait of the 'star rating' issued by all five FIA-based NCAP programmes and just makes things very confusing for consumers for the sake of driving the industry forward in safety. Interpreting a star rating is ambiguous and often quite misleading. The IIHS' system of assigning an individual rating for each test and only rewarding cars that perform well across the board is much more appropriate.

What consumers gather from the propaganda is 'don't buy Maruti Suzuki'; it's hurt other Japanese OEMs badly too: if it's a Polo scoring well it's a 'validation of its build quality' but if it's a Honda Jazz it's been 'engineered specifically to do well in the test' (truth is, both are).

[amitku]

IMHO MSIL have been opposing all the new regulations being proposed by government for the betterment of consumers.
They opposed:
1. Mandatory 2 Airbags
2. Shift from Euro-4 to Euro-6 fuel
3. And now Mandatory 6 Airbags in cars.

MSIL is one of the biggest hippocrates as they have different standards for cars sold in India Vs cars exported to European and other countries.

Example is the Suzuki Swift which for a long time was sold without Airbags in India (leave alone ABS, EBD, etc), while the same car was exported to European countries with 2 or 6 Airbags and other safety features.
Now when the Indian Government has made Airbags mandatory, they are crying about costs.

In the name of selling Entry Level cars, substandard and unsafe cars have been sold in India. Tata Tiago ( entry level car) since it's launch had 1 Airbag which after government regulations now comes with 2 Airbags and also has a 4* NCAP rating. It is a modern, contemporary and a safe car with features available.

A few more cents:
1. Maruti Alto is not the largest selling car in MSIL stable since a few years.
2. Swift Swift/Dzire siblings are the highest selling.
3. WagonR which has been updated to international standards is the highest selling car.

On safety standards.
Tata Motors which was going downhill in sales for a few years, took a U turn when they started introduction of 4&5 * NCAP safety rated cars. People want modern, safe and contemporary cars. Not essentially Cheap cars.

People going from Cars to Motorcycle is a myth being created by MSIL.
They have lost market share in small cars because they did not upgrade their cars to international standards. Other manufacturers are taking market share from MSIL as they are offering newer and safer cars.

Another point.
MSIL has not introduced an EV till now as they have been happily selling cheap unsafe cars, although if you go to MSIL Gurgaon plant, they have deployed WagonR EV for factory shuttle duties since 2019-20.

So they have EV in their portfolio but not selling them as they are Happy selling "Bread and Butter" cars.

MSIL is still stuck in the nostalgia of being a Government owned company who dictated and controlled Government Policies. It is not a coincidence that most changes in policy happened post privatisation/sale of MSIL to Suzuki.

Mr. Bhargava is a respected Auto Industry leader and veteran, but we need to remember his 25 years as an IAS officer before joining MSIL. Bureaucracy is in his blood

[sam_babushka]

I think an accurate analysis of what Mr. Bhargava stated can be had by looking at the growth rate of the domestic four-wheeler passenger vehicles market. A dipstick of the last five years should help.

Automobile Domestic Sales Trends (Source SIAM website)
(In Numbers)
Category - Passenger Vehicles
2016-17 3,047,582
2017-18 3,288,581
2018-19 3,377,389
2019-20 2,773,519
2020-21 2,711,457
2021-22 3,069,499

2016-17 through 2018-19 showed an upward trajectory for the total number of passenger vehicles sold YOY, which then declined. 2021-22 sales have now merely exceeded total sales in 2016-17. This indicates that passenger vehicles sales have de-grown for the last two years, which is surprising for a growing market like India.

One probable theory is that the masses found four wheelers in general to be expensive and reverted to buying two-wheelers instead. But the data shared by SIAM for domestic two wheeler sales indicate that it is not the case. The two wheeler market has shown de-growth as well

Category - Two Wheelers
2016-17 17,589,738
2017-18 20,200,117
2018-19 21,179,847
2019-20 17,416,432
2020-21 15,120,783
2021-22 13,466,412

Hence, there may be some truth in his statement (quoting from the article) 'The people with limited incomes are not able to buy even a two-wheeler that's the reality today'

This is not a Maruti issue, this is a 'decline in purchasing power of the country' issue - my humble submission


EDITing to add one significant possible reason to this decline/stagnation - the manifold growth of the used car / two-wheeler market in India over the last six years