Tough competition in the compact car segment prompts Maruti to overhaul Wagon R.
Wagon R is the second largest selling model for Maruti and contributes 17 per cent to the company’s total sales. But when India’s largest car maker announced late last month that its tried and tested workhorse will go in for a complete makeover with a new engine on a new platform, it didn’t come as a surprise.
The reason for the re-launch was simple: Maruti’s dominance in the A2 or compact car segment has been under threat for quite some time now, with the entry of global biggies in this segment. Examples: the stupendous success of Hyundai’s i10 and General Motor’s Beat has in recent months forced Maruti to give hefty dealer discounts on Wagon R.
The A2 segment is the main growth driver for the passenger car industry in India and saw the launch of seven models last year, resulting in a total of 20 brands. The major models include the Maruti A-Star, Estilo and Wagon R, Hyundai Santro and i10, Tata Indica, Chevrolet Beat, Ford Figo and Fiat Palio. This segment, which is priced between Rs 3.2 lakh and Rs 4 lakh, is expected to grow 17 per cent this year at 7,00,000 units as compared to 5,96,000 units in 2009.
Shashank Srivastava, chief general manager (marketing), Maruti Suzuki India, says “the demographic and the psychographic change in the customer profile in India are tempting all manufacturers to refresh and upgrade their products.”
So Maruti’s original ‘tall boy’ has now become its ‘Blue Eyed Boy’ in a new campaign. Rakesh Batra, national leader (automotive practices), Ernst and Young, says Maruti’s move makes ample sense as there is intense competition in the compact car segment in India. “With the new Wagon R, the company is trying to not only upgrade but also differentiate its product from its peers in the category so as to retain its leadership,” Batra says.
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The bigger question is how Maruti would ensure minimum cannibalisation amongst its products within the same segment as the new Wagon R shares the 998cc K-series BS IV compliant engine of A-Star. Mayank Pareek, executive officer (sales and marketing), Maruti Suzuki India, has an answer. “There could be 5-7 per cent cannibalisation in the same portfolio, but we are optimistic that the overall volumes will go up.”
Adds Srivastava: “While the A-Star is targeted at the young, urban, upper middle class-people in the high income category, Wagon R will target the younger but family-oriented people in the medium income bracket.”
The Blue Eyed Boy campaign banks on innovation, one of them being Red FM turning Blue for an entire day to celebrate the new features of the car. Everything from the station jingle and bumpers to the RJ’s sign off was modified to incorporate the vehicle’s features. Shrivastava says the link is between the physicality of the car which has “blue eyes in the headlamps” to the overall concept of the brand that is a “favourite car”.
The company, which has pumped in Rs 290 crore to upgrade the vehicle, will spend close to Rs 22 crore on the campaign. That’s a jump of 80 per cent over what Maruti spent on promoting the earlier model.
Wagon R was launched for the first time in India in 1999. The vehicle got its first facelift in 2003 followed by some minor changes in 2006 and finally a complete model change now.