Maruti Banking On UV Segment To Boost Overall Sales

Maruti Suzuki has been seeing erratic movement in its sales trends lately, which have been caused by production halts this year and last year. However, one fact that is clear is that the company’s sales have been boosted significantly by the launch and success of its Utility Vehicle (UV) model, Ertiga.

FY13 has been slow for the automobile industry. The downturn has been worsening over time, and there are no signs of revival so far. An improvement in macroeconomic trends can be the only factor that can result in an improvement for the industry. During these depressed times, UVs have been showing some robust performance, running contrary to the general trend in the industry. Maruti would now need to strengthen its standing in the UV space to augment its overall sales.

Data released by SIAM (Society of Indian Automobile Manufacturers) shows that the overall sales of passenger vehicles from April 2012 to February 2013 grew by a moderate 4.07% as compared to that in the previous year similar period. This growth was solely supported by the UV segment, which grew by a whopping 54.46%. In stark contrast, the sales of vans grew by a mere 1.02% and those of passenger vehicles actually dropped by 4.64% in the period under review.

Coming back to Maruti’s performance, the company’s sales volume growth in the period April 2012 to February 2013 has been at 5.55% as compared to that in the previous year. Passenger cars grew by a mere 1.65%. On the other hand, UVs grew by 1355.54% due to the acceleration provided by Ertiga. Sales in this segment have been so robust that the company has managed to sell 72704 units in the period under review this year as compared to 4995 units in the previous year. If it weren’t for Ertiga, the domestic sales of Maruti would have seen a decline so far.

Media reports have indicated Maruti’s desire to concentrate on the UV segment by launching more products and to thus increase its market share in the Indian market. Maruti Suzuki India’s MD and CEO Shinzo Nakanishi are reported to have said that having just the Ertiga is not enough. The company is now working on an all-new Sport Utility Vehicle named XA Alpha. It had displayed the concept of this vehicle at the 2012 Auto Expo.

Maruti is not the only one to have benefitted from the soaring sales of UVs. While automobile manufacturers have been struggling to get their vehicles sold, M&M has grown by 28.58% in April 2012-February 2013 as compared to the previous year. This magnificent growth is due to its extensive presence in UVs, with this segment contributing to more than 95% of the company’s sales in passenger vehicles. Similarly, the launch and success of Duster has helped Renault increase its sales by 10 times between February 2012 and February 2013.

Clearly, a strong foot in the UV segment has helped auto players weather the tough times. Maruti’s product development in this segment and its keenness to strengthen its presence here will surely help the company boost growth further and outperform its peers.