Maruti looks to up the ante in SUV market, gears up for record production in FY24 to claw back share

India’s largest carmaker has sounded its vendors to prepare to produce 2.5 million units of cars in FY24 that would include production of quarter a million of Grand Vitara/Hyrider at Toyota’s facil­ity in Bidadi, two persons aware of development said. The production target is likely to translate into the volume growth of more than 25%— the company’s highest in the last decade. An email sent to Maruti remained unanswered.

The maker of Swift and Dzire is bracing to produce around 750,000 units of the SUV in the next fiscal that would include incremental volume of two new SUVs that company will be launching next year taking total SUV models to four, along with Brezza and Grand Vitara.

The two models include the Jimny—set to be unveiled at the auto expo next month and a Baleno cross codenamed YTB. With a production plan of over a lakh per year for each (including exports) both models expected be priced in the sub-Rs10 lakh segment and are likely to be a volume spinner for the company. It’s not clear if the Baleno cross will also be re-badged and sell under Toyota brand.

With multiple SUV models in its folio, Maruti’s market share is likely to improve in the SUV segment. Maruti Suzuki had a market share of 10.4% in the SUV segment at the end of September 2022 quarter, with an improvement of 190 basis points on a sequential basis.

SUV sales in India have been advancing at a brisk pace year after year for over three years now accounted for more than half the passenger vehicle market in the passenger vehicle market in the first half of the current fiscal. Maruti’s move to tap aggressively into the segment with new launches is expected to help the firm claw back its share, but it won’t come easily, said analysts.

“With the segment getting increasingly competitive with multiple models, from a seller’s, it would become a buyer’s market and gaining share may not be easy for the Japanese carmaker,” said Puneet Gupta director – S&P Global Mobility. According to Gupta, a model like a Baleno cross may end up cannibalising sales of some of the Maruti’s brands like the Baleno, he said.
To be sure, it would be “a win some and lose some” for Maruti in the SUV market owing to the fuel types, said Gupta. Even as the absence of diesel offering in its SUV portfolio will put the company at a disadvantageous position vis a vis rivals, hybrids will hold the company in good stead once the BSVI 2.O norm kicks in. The norms will make diesel more expensive and hybrids a preferred choice.

The delivery of 2.5 million production target would take annual volume growth of Maruti Suzuki to 8% annually in the past decade compared with 5% currently. In the first eight months of the current fiscal, Maruti Suzuki has produced 1.31 million vehicles, a growth of 30% over the last year in the same period. Average monthly production in the current fiscal reached 1.64 lakh a month in the current fiscal and is slated to cross more than two lakhs in the next fiscal year.