Maruti expands lead over rivals with 51% share, best ever sales in October

Shift towards petrol, entry-level vehicles and robust distribution in rural areas helps company to maintain pole position

A wide range of petrol models, a shift in demand towards entry-level vehicles because of the economic downturn, and good distribution in rural areas helped the country’s largest carmaker Maruti Suzuki India strengthen its leadership position in the market, according to sales data for October.

However, it faces growing competition in the premium vehicles space, notably in the mid-size and utility vehicle segments. In October, seven of 10 top selling models were from the Maruti stable. The company sold 166,825 vehicles — the highest in its history, which propelled its retail market share to 51.1 per cent from 49 per cent in September. October was the best month for all automakers in a long time, coming in a year when the industry faced the double whammy of weakening sales worsened by the pandemic.

“During turbulent times, people prefer the well-known and reliable brand and that was positive for Maruti. Also, with a shift from diesel to petrol models on the back of fuel price convergence between diesel and petrol, Maruti benefited due to its strong petrol model line-up,” said Shashank Srivastava, executive director (marketing and sales) of Maruti Suzuki. 

“There has been a huge shift in demand towards petrol vehicle,” Srivastava said, adding that October saw the lowest diesel vehicle sale at 17 per cent as compared with 29.5 per cent last year. He said Maruti has 60 per cent share of the petrol vehicle market.

The price increase in diesel cars after the transition to BS-VI emission regime was also a reason for the shift in consumer preference. For instance, in the hatchback segment, the share of diesel is barely at 0.3 per cent.

Srivastava said the trend is now visible in the SUV segment, despite heavy competition from rivals that have diesel variants. “We are selling only the petrol variant of Brezza, but despite that, in October, it is the market leader in that segment despite others having diesel option.”

The company has been the largest beneficiary of increasing demand from rural areas and customer preference shifting towards the entry-level segment with falling incomes. Srivastava calls this phenomenon “telescoping of demand downwards”.

Over the past decade, Maruti has increased the number of sales executives and dealerships in rural areas by over five times. Maruti employs influential people in villages, like sarpanchs and village elders, as rural sales development executives (RDSE). “Irrespective of internet, people buy cars after suggesion from village elders like sarpanch or a known person. A big showroom doesn’t attract the rural buyer that much. We have 14,000 RDSEs,” Srivastava says. Rural areas contribute 40 per cent to the company’s sales volume as compared to nine per cent in 2007-08.

However, its market share has been under pressure in the segment after Hyundai launched Venue (compact SUV) and Creta (mid-size SUV). New entrant Kia Motors’ compact SUV Sonet has further intensified competition.

Analysts are optimistic about the company. “In this pandemic, people are moving to lower-end vehicles, where Maruti has wider product range,” an analyst at a top brokerage said.