[romeomidhun]

Maruti Chairman Mr. R.C. Bhargava speaks some truth. He talks about the current financial situation of the auto market in India, but it is true in every other segment.

Source: https://economictimes.indiatimes.com...w/91186410.cms

The people with money are able to buy cars because they can pay the higher prices. The people with limited incomes are not able to buy even a two-wheeler that's the reality today, he asserted.

This has affected the automobile industry very badly. And most other areas also - that lower income people are struggling to make their lives, while higher income people are not much affected. I know people shifted from cars to bikes for daily travel because of the Petrol prices. I know people who postponed their car purchases and upgrades. People are still waiting for those good days.

[searacer932]

And they still priced XL6 atrociously!

[Turbanator]

The small car market, which is the 'bread and butter' for Maruti Suzuki India, is shrinking and the 'butter' from the segment has gone away with only bread left now, Chairman of the country's largest carmaker RC Bhargava said

When asked about the company's plans to overcome the challenge, he said, "We have to take note of what the customer wants and what the market is doing. As you are aware, we are launching vehicles in other segments and the bigger segments, also including the SUVs.

From the link above, I will say Maruti has been selling whatever they are comfortable in the market, and people would buy it, especially first-time buyers. In recent Years with Koreans and Tata/ Mahindra coming with new launches, this has changed and must be hurting Maruti on margins now.

Regarding the issue of affordability, I will say it's an excuse. There is enough demand in the market for the right product.

I hope they mend themselves quickly and come out with newer launches.

[WorkingGuru]

This is the dreaded K-Shaped progression of the Indian economy. The "recovery" is limited to very small portion of the citizenry - which is largely living in its own indifferent bubble.

More industry leaders need to speak the truth they're witnessing.

[volkman10]

Some more points on the subject:

Over the last three years, people from the low-income group are not able to buy vehicles for commuting – be it a two-wheeler or an entry-level hatchback - as these vehicles have become expensive.

Prices have gone up by at least 32 per cent in the hatchback segment in the past three years

Maruti to focus on SUV's, and High-End Cars as Demand for Hatchbacks Wanes: Maruti Suzuki to go aggressive to regain market share

It is planning to strengthen its presence in the SUV segment with the launch of new products. Maruti’s market share in the SUV segment in FY22 was about 11 per cent. The company’s overall market share was 65 per cent (without SUVs) and was 43.4 per cent with SUVs.

The SUV segment mix (including MUVs) improved to 50.5 per cent in FY2022 from 43.4 per cent in FY2021 and 39.1 per cent in FY2020. The SUV mix in India has surpassed the global SUV mix, which stood at about 45 per cent in CY2021

Link

[padmrajravi]

Originally Posted by searacer932

And they still priced XL6 atrociously!

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.

[Carma2017]

Whatever Mr Bhargav speaks always polarizes opinion within T BHP community. Generally it is always vested interest that speaks whenever things go against the wishes of Business Leaders. And Mr Bhargav is no different. I was going through their annual numbers released yesterday. What is very interesting to note is that overall, Suzuki India has done much better than last year. It is only because of semiconductor availability issues, they are selling less in India which is more Semiconductor heavy in terms of its needs.
This hue and cry is directed more towards the future when the cheapest available car would be 5 Lac plus ex showroom.

[schwartz]

It is easy to it blame on the economic conditions.

You need to develop products that folks would be happy to pay for. Its that simple.
- Kia Carens is sold out for the next six months even though it retails at a significant premium to the new XL6.
- Maruti has been exporting Jimny for over a year now. The local launch is nowhere in sight. Meanwhile the Thar is getting a free run.
- They sell as many as seven small cars (Alto, Celerio, WagonR, Spresso, Ignis, Swift, Baleno). They have a model where a variant could have done the job. The R&D budgets would have been better spent elsewhere. This typically happens in organizations where left doesn’t talk to the right.
- They were peacefully buying Diesel engines from Fiat. Then six months before the BS6 transition they launched a diesel engine developed in-house. Come BS6 they discontinued it. Diesels continue to be popular in SUVs. However, Maruti has nothing to show in the portfolio.

Its a tough market. They are blundering away their competitive advantage. But yes, one can continue blaming the economic environment!

[ArTigor]

The statement on spending capacity is right indeed. If we see the overall proportion of car buyers/owners v/s the general population, one would find that the car buyers/owners are still a very small proportion. No doubt any fall in sales in car sales (not linked to manufacturing constrains) will act as a minor indicator for economic situation. Yet the two wheeler sales numbers are more relevant indicators as they cater to a larger cohort of population which surely can act as a strong indicator for deriving inferences. We all know 2 wheeler sales are falling, some may attribute this to fuel prices, but the fact that income levels have been stagnant along many sectors can not be denied. For example back in 2011, I earned rupees 11k as stipend every month after my 3rd year as an architectural intern in Mumbai (B Arch is a 5 year course), today an Intern is hardly paid and average salary to fresher architect in Mumbai starts at 15k rupees. Similarly there are various sectors like reality, tourism, arts, Food & Beverages, which have witnessed price correction, thus impacting the salaries of all depended on it.
It is a fact that spending capacity of average Indian has decreased compared to the years 2005-2010.
But this statement has a misleading aspect too. Within whatever bandwidth the automobile companies are playing, the fall of Maruti market share has more to do with the rise of other players like Tata, Kia, Mahindra etc. As for those who are not in a condition to afford a vehicle or are on the fringe, are holding back, these were the entry level car buyers and this constituted of a major chunk for Maruti. As for Those who can afford, are dumping the cheap (perception) cars and going for better aspirational products. With its current line up, Maruti is neither here nor there.

[ninjatalli]

I think it's a matter of sour grapes for Maruti for not pulling up their socks. Look it up from a year on year basis (ignoring recent Covid based declines), here's the breakup of sales numbers as of

Year upto March 2022

Maruti share: 42%, 1.34L cars (out of 3.2L cars)
Key sellers: WagonR (24k), Dzire (18k), Baleno (14k), Swift (13k)

Year upto March 2020

Maruti share (for Feb'20): 53%, 1.33L cars (out of 2.5L cars)
Key sellers: WagonR (18k), Baleno (16k), Swift (18k), Ertiga (11k)

Year upto March 2018

Maruti share: 50%, 1.47L cars (out of 2.95L cars)
Key sellers: Alto (23k), WagonR (14k), Dzire (22k), Baleno (16k), Swift (19k)

Year upto March 2016

Maruti share: 47%, 1.18L cars (out of 2.5L cars)
Key sellers: Alto (22k), WagonR (24k), Dzire (15k), Swift (15k)

They are just playing around with the same products with hardly any new products and the best sellers just keep rotating over a few cash cow products (WagonR, Dzire, Alto, etc.).

No matter how far in the past you go, the top 5 players control more than the 80% of the market. While Maruti's been holding its #1 position oscillating between 40% & 50%, players like Tata, Kia and Mahindra have been upping the game. Also, the average ticket size of car purchases for these manufacturers are much higher than that of Maruti.

For example in 2022, top 4 products by sales (all in 000's in sales) for each firm are
Maruti: WagonR, Dzire, Swift, Baleno
Tata: Nexon, Punch, Altroz, Tiago
Kia: Seltos, Sonet, Carens (& a few hundred Carnivals)
Mahindra: XUV700, Bolero, Scorpio, Thar

No wonder Bhargava is crying sour grapes.

[deehunk]

Originally Posted by romeomidhun

Maruti Chairman Mr. R.C. Bhargava speaks some truth. He talks about the current financial situation of the auto market in India, but it is true in every other segment.

I know people who postponed their car purchases and upgrades. People are still waiting for those good days.

Maybe he thinks it was easy for low-income people to buy Maruti's tin cans with no airbags or ABS in those good days. Mr. Bhargava must do soul searching and see for himself if the Alto and Espresso give any confidence to prospective car buyers from low-income groups.

[romeomidhun]

Originally Posted by deehunk

Maybe he thinks it was easy for low-income people to buy Maruti's tin cans with no airbags or ABS in those good days.

Please note that the last paragraph is my own statement and not Bhargava's.

What Bhargava said about financial conditions is correct, but as people said here, he can't blame entirely on financial conditions.

Maruti missed the SUV bus. Running behind it, and yet to catch up.
Maruti missed the features and bling bus. Just now they are catching it.
Maruti missed the EV bus. They may catch it up in another 3 years - in 2025!

The "aged" think tanks in Maruti proves costly for them. For the last 2 years, one of their senior management fellow kept on saying in the media that "we are preparing a marketing plan for Jimny"!

Such a conservative approach will prove to be suicidal for Maruti. Times have changed. By the time they get convinced about a new segment or technology and preparing to launch their models, the market might have moved in another direction. Their Diesel launch is a perfect example.

[androdev]

Maruti is the nursery section of a school. All new kids admitted there and move on to higher grades.

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.

Maruti business model entirely relies on Indian economy's ability to produce highly price conscious first time buyers who just about crossed the threshold to buy a Maruti.

[Turbohead]

+1 to Androdev.

Maruti might have messed up big time in terms of features, profitable crossovers and even the EV train but the old man is however right- if there is true economic growth pushing people from low income groups to middle class, the growth in basic Marutis should ideally be much higher since 4 wheels is a huge upgrade from 2 wheels for a family and features etc wouldn't make much of a difference.

[Carma2017]

The problem with the view taken by our forum members in general is that we consider Suzuki to be a giant if Indian Automotive Industry. However the truth is Suzuki is a tiny player in the global shark tank. It neither has huge resources like the TATA group or Hyundai group etc, nor it has the wherewithal of M&M to grow inorganically. So, the money and effort that Suzuki expends is focussed on getting maximum bang for the buck. Here in Japan, they are famous at the Stock exchanges as a money making company. All that was fine when Automotive market was growing and maturing naturally with a natural progression of laws. But the last 3-4 years of rapid regulatory upgradations have caught not only Suzuki but all J-OEMs on the wrong foot. TATA had began the starting from scratch process a few years back and were in the right place at the right time. To compete they needed a theme (like Suzuki is synonymous with low cost small cars) to be associated with and GNCAP was a god send to them. 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 Japanese as a race are not knee jerk reaction type of people and are known to deliberate a lot before executing rapidly. With rapidly changing regulatory environment and with influx of KIA and it's flashy gizmos and fearmongerer-in-chief GNCAP, Suzuki understood that this is going to be the norm. So, they had actually gone right back to the drawing board along with other Japanese OEMs. The only reason we do not hear much about the other J OEMs is because their exposure to the Indian market is very low. How well they respond to the new normal will define their future in India.

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.