[pqr]

Maruti earns less revenue on Brezza than Fronx | Reason : Flawed petrol engine strategy



Maruti Brezza was launched in 2016 with a 1.25L Fiat-sourced diesel engine mated to a 5MT. Later in 2018, Brezza also got the 5AMT transmission option. In 2020, during BS4 to BS6 emission standard transition, Maruti replaced 1.25L BS4 diesel engine with 1.5L BS6 petrol engine with a 5MT and 4AT transmission option, and gave Brezza a mild facelift.

In 2022, Maruti went for a generation change of Brezza and transmission was upgraded to 6AT. In 2023, the Brezza also got a CNG option and became the best-selling SUV/crossover in India.



Brezza and Fronx are offered with petrol (+CNG) only engines that are smaller than 4m in length so they both qualify for a lower GST rate of 29% (GST rate of 28% + 1% compensation cess).



However, Maruti offers only 1.5L petrol engine on Brezza, so the compensation cess level goes to 17%. Whereas Fronx with 1.2L NA and 1L turbocharged petrol engines stays in the lower tax slab.



As a result, Maruti and its dealers have to part away a higher tax amount from the overall ex-showroom price charged to customers on Brezza as compared to Fronx. Variant by variant, Brezza revenue collection remains lower than Fronx, despite Brezza being a higher-priced car. So overall, from a business perspective, Brezza doesn’t remain a very competitive offering.

Or, here, Maruti becomes an unsuspecting Robin Hood of an Indian automaker? Charging a higher price from customers who are sold on the imposing SUV stance of Brezza and afterwards contributing more taxes to the governments (state and center) than competitors, for the benefit of the masses from the higher tax amount. [Satire]



Maruti’s engine strategy for Brezza is totally flawed since BS6 transition. They should have put that 1L turbocharged engine in the Brezza and could have garnered higher revenue from each car sale, even after keeping the price the same, just like the rival Hyundai Venue.

[DRPSREDDY]

Originally Posted by pqr

However, Maruti offers only 1.5L petrol engine on Brezza, so the compensation cess level goes to 17%. Whereas Fronx with 1.2L NA and 1L turbocharged petrol engines stays in the lower tax slab.

Or, here, Maruti becomes an unsuspecting Robin Hood of an Indian automaker? Charging a higher price from customers who are sold on the imposing SUV stance of Brezza and afterwards contributing more taxes to the governments (state and center) than competitors, for the benefit of the masses from the higher tax amount. [Satire]

Maruti’s engine strategy for Brezza is totally flawed since BS6 transition. They should have put that 1L turbocharged engine in the Brezza and could have garnered higher revenue from each car sale, even after keeping the price the same, just like the rival Hyundai Venue.

That is the exact equation where Nexon is doing higher numbers than Brezza. The 1.5L petrol in Brezza make less power and torque than Nexon's 1.2L. Also 3rd party insurance is very expensive and fuel efficiency too is very low. That is the very reason sensible people dump Brezza and buy the Fronx. After all Maruti Suzuki is known for small cars and no one buys expensive cars from them.

Brezza being a 1.5L Petrol with higher tax slabs has to compete against Kia, Tata and Hyundai, which is a tough task.

[Shreyans_Jain]

It is very myopic to look at Fronx vs Brezza economics as just 1.0 Boosterjet vs K15C. Have to take into account that the Brezza is built on a different platform which is not only safer and sturdier than the Heartech, but also provides for significantly better ride and handling. Brezza also does not benefit from the extreme economies of scale available to the Fronx, which is literally a raised Baleno, and the sea of other small cars on the Heartech. By all means, Brezza is a car from a different, higher segment.

Then there is the fact that the Boosterjet is a relatively new engine with use in just one car today. It is not proven in the Indian market. It was launched in the Baleno Sport many years back, and discontinued soon after. The 1500cc NA on the other hand is a proven, time tested engine and also does duty in many other cars. Sells tens of thousands on copies every month between Brezza, Grand Vitara, Hyryder, Ertiga and XL6. Peace of mind is assured.

Let’s also not forget that bulk of Fronx sales come from the K12C, not the turbo engine. Rest assured, the larger NA engine is a USP of the Brezza in a segment filled with small 3 cylinder turbo petrols. The car sells on merit, and is one of the best sellers despite having the worst interiors, poor feature set and no other engine option. But the mechanical aspect is as solid as it gets here, and everyone knows that.

[ABHI_1512]

Originally Posted by DRPSREDDY

After all Maruti Suzuki is known for small cars and no one buys expensive cars from them.

Brezza being a 1.5L Petrol with higher tax slabs has to compete against Kia, Tata and Hyundai, which is a tough task.

Brezza is among the top selling models of Maruti despite the absence of a diesel engine and clearly stumps the other cars from its segment. Grand Vitara is slowly gaining ground amongst buyers as well and you are saying no one buys expensive cars from them !!

The thread is about Brezza making less money than Fronx despite being in the same segment and priced higher. The thread is NOT about the sales figures of both the cars and certainly not about the competition between the car manufacturers.

[pqr]

Originally Posted by Shreyans_Jain

Have to take into account that the Brezza is built on a different platform which is not only safer and sturdier than the Heartech, but also provides for significantly better ride and handling.

Fronx is just a jacked-up Baleno. The same Baleno that achieved 4 stars in the EURO NCAP way back in 2016. Do you know how that was achieved? It is being built on the same production line. And before export shift production starts, the line has to be stopped for 2 hours. Robots are reprogrammed to weld higher-strength steel in some areas, as opposed to domestic Baleno.

Originally Posted by Shreyans_Jain

It is not proven in the Indian market.

This is an engineering challenge, and the board needs to give tasks to R&D to solve the problem. So that business can make money. You might not be aware that Brezza now makes less profit as compared to days when diesel was available.

Originally Posted by Shreyans_Jain

Rest assured, the larger NA engine is a USP of the Brezza in a segment filled with small 3 cylinder turbo petrols.

72% of Tata Nexon sales come from 1.2L Turbo MPFI, 40% of Hyundai Venue and Kia Seltos sales come from Turbo direct injection petrol, and not to forget, they all have diesel too, accounting for 20% of sales.

Originally Posted by Shreyans_Jain

poor feature set

Feature-wise, when launched, it was the first car in the segment to get a 360-degree camera and a head-up display—both having a wow effect, though execution is not so well. And it has the most expensive and best LED projector headlamp setup in this segment, or even a segment above.

It is the best seller because of its SUV stance; time and again, it has been proven in several customer clinics. Bottom line: The best seller is not making the best profit. The answer is a comfort zone of 1.5 NA; that is not good in the long run to make a profit.

[Motorhead007]

This is a very interesting comparison, and makes all the more a strong case for smaller, turbocharged engines from Maruti. Ibam sure that R&D costs for adding a turbocharger to an existing engine would not be that much for Maruti, given they already have the technology and the expertise. The benefits (read profits) from the investment could be much higher than the costs incurred.
In any case, Maruti should be seriously looking at turbo engines for their higher car segments. Literally all manufacturers, small or big, have decent T-petrols in their stable and it is a necessity than something good-to-have for the car company.
In my opinion this is now more of a changed business requirement than something aspirational.
Would someone know if MSIL is developing a good turbo engine already in India ?

[DRPSREDDY]

Originally Posted by ABHI_1512

Brezza is among the top selling models of Maruti despite the absence of a diesel engine and clearly stumps the other cars from its segment. Grand Vitara is slowly gaining ground amongst buyers as well and you are saying no one buys expensive cars from them !!

The thread is about Brezza making less money than Fronx despite being in the same segment and priced higher. The thread is NOT about the sales figures of both the cars and certainly not about the competition between the car manufacturers.

I agree with you that the discussion is not about sales figures and competition. Historically it has always been the same that Suzuki was known for small cars. Till now only Kia and Hyundai were ruling the segment that Grand Vitara is in. Competition has entered with Toyota, Honda, Skoda and VW too selling cars in the segment.

Coming to Brezza, yes, it's selling well but it's no more the top seller anymore. As I said the issue is with the engine and the lack of options that is the reason it's not making money. They only have one engine option. All it's competitors selling 1.2L engine in the segment and they are the only one in the sub 4 meter category to plonk a 1.5L engine. The entire value of the sub 4 meter low tax value segment is lost and they are forced to sell at the price point of competition. Consumers too need to pay higher 18% GST compared to 12% GST. Also third party insurance bumps up and overall cost of insurance shoots up.

Maruti should have considered a 1.0L turbocharged engine for it's profits and end consumers long term maintenance costs.

[ellip5i5]

Is this product approach an intended outcome from the policy is the question. But only a few cars like the Brezza, Thar remain sub 4M with a >1.2 engine, indicating the policy’s effects

Maruti has two choices possibly, plonk a sub 1.2 engine (turbocharged) to be more competitive or extend the Brezza beyond 4M and compete a segment above (which seems unlikely with the Grand Vitara)

[uditanshh]

Originally Posted by pqr

Brezza and Fronx are offered with petrol (+CNG) only engines that are smaller than 4m in length so they both qualify for a lower GST rate of 29% (GST rate of 28% + 1% compensation cess).
However, Maruti offers only 1.5L petrol engine on Brezza, so the compensation cess level goes to 17%. Whereas Fronx with 1.2L NA and 1L turbocharged petrol engines stays in the lower tax slab.

One thing that I fail to comprehend is why doesn't Maruti give the Brezza with Strong Hybrid option?

The 1.5L NA shared with the Grand Vitara already pushes it to the 45% tax slab, why not share the Hybrid powertrain with Toyota which remains similarly taxed (43%) yet comes paired to an eCVT which provides much better drive experience than the 1.5L NA + 6AT? Providing the Strong Hybrid with the Brezza at least as an option would give Brezza a USP in an era when the competition have better powertrain options, much premium interiors and exteriors and what not.

Hope Maruti considers making a Brezza Hybrid, even as an optional additon to the variant lineup.

[avira_tk]

This is what happens when you shoot yourself in the pretending diesel isn't worth it. A diesel would have solved this problem, unfortunately, Suzuki had zero engineering chops for making a decent diesel. The 1.5 is just unremarkable, it's ancient tech and other than Maruti service network, has got nothing going for it.

[Amrit@wheels]

Originally Posted by DRPSREDDY

That is the exact equation where Nexon is doing higher numbers than Brezza. The 1.5L petrol in Brezza make less power and torque than Nexon's 1.2L. Also 3rd party insurance is very expensive and fuel efficiency too is very low. That is the very reason sensible people dump Brezza and buy the Fronx. After all Maruti Suzuki is known for small cars and no one buys expensive cars from them.

I am sorry but that's completely untrue. I have many friends and relatives with one or another variant of Brezza and fuel efficiency has never been an issue. Even the AT variant consistently delivers ~15 kmpl in city and 18 kmpl or more on highways. Manual variants are even more frugal. The only reason the majority of people go for Fronx over Brezza is the price, that's it. I have driven both and Brezza is the superior vehicle, a commonly accepted take.
Also, people are happily buying 15L+ cars from Maruti, saying that "no one buys expensive cars from them" is again, untrue.

[SmartCat]

At the end of the day, what matters to the dealer is 'margins' and what matters to the manufacturer again is 'margins'. Revenue is not that important.

- From the dealer commission point of view, perhaps the margins on Brezza is higher.
- From the manufacturer point of view, perhaps the 1.5L engine has economies of scale.

It would be financially prudent for Maruti to sell as many models with 1.5L engine as possible to maintain such economies of scale. After all, it serves a large line-up of models like Ertiga/XL6/Brezza/Grand Vitara/Ciaz /Jimny/Hyryder/Rumion etc, all over the world. You cannot replace all these with the 1.0L turbo, because of different power/torque characteristics at low/high RPM, when compared to 1.5L NA engine.

That is, despite the higher tax bracket, it makes more economic sense (profitable) for Suzuki Japan/Maruti India to sell Brezza with 1.5L engine rather than 1.0L Turbo engine in India.

[ashis89]

^^
In addition to what SmartCat said, what also matters is Brezza is one of the highest model now for Maruti. In spite of what people think about its price or its design or its fuel efficiency, there are 15k other people every month who are buying it for personal use. Probably the only model in the Maruti portfolio which doesn’t have any offer or discount. Maruti must have done something right

[rishi.roger]

As a Nexon Petrol owner and having used Brezza now and then, I think I like the Brezza more when it comes to driving.
I would avoid using a 1.2L Turbo engine on it. The NA aspirated 1.5L maybe sedate but its good for city.
In fact, I think a 3cyl small displacement (although Turbo-ed) engines are cancerous for anything bigger than a standard mid-weight hatchback.

[Gedaliah]

I am one of those that use the 1.5 Ltr. engine referred to in this thread. But it is in the Grand Vitara and even though sedate in performance, it is not a bad engine. Of course, the turbo-petrols give instant acceleration. But, does not the fuel efficiency drop when you push the turbo-petrol engines hard? Fronx is for those who want the SUV feel at a lower price point. And, how many of the public even looks at engine performance figures? I would go with the Brezza with its proven 1.5 NA engine any day.