Is Maruti Losing Its Grip In The Entry Level Segment?

For a long time small cars were the face of country’s largest automaker Maruti Suzuki but the recent data shows that the company is losing its grip in the entry level segment.

In the last two months, Maruti has witnessed a fall in the sale of its entry level cars. Last month, the company registered a plunge of 4.7 per cent in this segment.

The two top selling models Alto and WagonR contributed 36 per cent share in the company’s total sales last year in November, now compring 34 per cent in the same period.

People familiar with the company says that the decline in the sales of small cars is mainly because entry level consumers don’t like to buy cars during the year end.

Another top reason that Maruti witnessed a fall in sales in the segment is the tough competition it received from the newly launched Renault Kwid which took the segment by surprise. In the first month of its launch, Renault sold around 5,000 units of the powerful small car.

An auto expert says, “5,000 units of Kwid sold means that Renault has been successful is chalking Maruti’s share. The segment which used to be very competitive three years back, now see too few launches. As a result, more the options in the segment means a threat for Maruti.” At present Maruti holds 85 per cent market share in the segment.

"Change in pattern of buying for urban buyers as well as a significant slump in the rural demand also contributed Maruti’s declining trend in the segment," he added.

For the April-November period in the on-going fiscal, while the segment has seen a minor fall in volumes, Maruti has recorded a growth of 5.1 per cent. It is only in the last two month that the company witnessed a fall.

In FY15, sales of Alto and Wagon R were up by nominal 2.40 per cent and 3.12 per cent to 264,492 and 161,250 units, respectively.

Hyundai, which sells its Eon in the segment, has witnessed a steep fall of 36 per cent in the April-November period and has been able to sell 45,206 units against 71,000 units sold last year.

No big launches in the segment plus discontinuing its top selling small car Santro has attributed company’s decline in the segment.

Not just entry level cars, Maruti’s Swift, which continues to be among the top selling models in the country for many years in a row, saw a steep fall in domestic sales in November. Swift sales in November fell to 11,500 units compared to 17,600 in October. Company officials maintained that the fall has been due to increased focus on the newly launched Baleno.