Maruti plans to drive sales via NEXA outlets

One in two passenger cars sold in the country for less than Rs 10-lakh are made by Maruti Suzuki. Yet the subsidiary of Japanese Suzuki Motor Corporation has not been able to sink its teeth into the premium car segment.

As Maruti Suzuki gears up to sell two million cars a year by 2020, it has a strategy to drive sales of its premium cars. If the strategy works, at least 10 per cent of Maruti Suzuki's sales in the next two years will come from its new chain of premium showrooms, NEXA.

The company intends to sell at least three models in NEXA showrooms in the next few months. It has sold 10,000 sports utility vehicles S-Cross since the model's launch a little over two months ago.

Maruti Suzuki plans to bring 15 new models into India in the next five years.

T Suzuki, president of Suzuki Motor Corporation, recently said at Frankfurt of the 20 models to be launched by company, at least 15 would be for the Indian market.

"Maruti Suzuki is facing an onslaught from two segments. One, luxury car makers like Mercedes and BMW are looking at bringing in entry-level cars to India. Two, multinational car makers like Renault are aggressively trying to tap into the Indian small car market," said Abdul Majeed, partner, PwC India and an automotive industry expert.

Maruti Suzuki needed to retain its customers who were upgrading to other Japanese or European brands, he added.

"In three decades we have created a strong market. However, over 50 per cent of the market is still out of our purview," explained R S Kalsi, executive director, marketing and sales, Maruti Suzuki. "From models to car sales and after-sales service, we are revisiting our practices," he added.

NEXA was born of the company's desire to come up with an offering for customers who wanted an evolved retail experience. Since its launch in August, the chain has sold around 10,000 vehicles.

"They have an array of models in their regular showrooms, and it is not possible to provide personal attention to a customer who is looking for a premium vehicle. To sustain their growth, they need to reallocate their portfolio," Majeed said.

The share of Maruti Suzuki's hatchbacks priced between Rs 5.5 and Rs 10 lakh has increased from 2.4 per cent of overall passenger car sales in 2014 to over six per cent in 2015.

Mid-sized and premium sedans along with premium utility vehicles (priced Rs 15-25 lakh) have clocked sales of 93,000 vehicles during April-August. This is a segment India's largest car maker cannot ignore.

Barely three per cent of Maruti Suzuki's sales come from the segment priced above Rs 10 lakh. This segment, largely an urban phenomenon today, will make inroads into the rural market in five years.

"As the Asia-Pacific market becomes competitive, with Hyundai, Toyota and Honda together with Chinese original equipment manufacturers clamouring for space, Suzuki needs a strategy to not lose its leadership position in India. Its main markets are Japan and India at the moment and Japan is not a fast-growing market," Majeed explained.

Suzuki's Japanese rivals, Toyota and Nissan, have tried similar sales strategies for their Lexus and Infiniti brands with reasonable success.

Maruti Suzuki has, therefore, left no stone unturned to provide a customised experience to this new customer segment it aims to crack. "The entire NEXA team was trained with in-depth and holistic modules. Team members were trained on modules according to his/her role," Kalsi said.

"The Kizashi and Grand Vitara will not be the correct examples as they were imports. For such vehicles, a high import duty makes the value equation uncomparable for local production cars," He added. With the Ciaz taking off, and a pipeline of new launches, Maruti might just get the equation right this time.