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Maruti is running harder: But can it defend its leadership?


By cutting costs, slashing production, introducing special editions of its models to turning up the amps on marketing and promotions, Maruti is using every trick in its playbook to defy the market slump and beat the competition.
DEEPANSHU TAUMAR | Issue Dated: August 4, 2013, New Delhi
Tags : Maruti Suzuki | Indian automobile industry | Tata Motors | Honda | Ford | M&M | Chevrolet |

By all accounts the current year is proving to be the worst in a decade for the Indian automobile industry. The passenger vehicle market has continued its downward journey as car sales fell for the 8th consecutive month in June. Sales were down 9% to 1,39,632 units as against 1,53,450 units in the same month last year. For the first quarter, car sales fell 7.24%, led by a double-digit decline. Even India’s largest car maker Maruti Suzuki posted an 8% decline in sales for the month of June whereas Tata Motors’ sales were down 33% and Toyota’s sales fell 20% in the same period.

In the face of grim market conditions, market leader Maruti Suzuki has been trying to hold its own through a raft of recent initiatives. While mounting economic challenges have slowed down demand for the industry as a whole, intensifying competition has made life even tougher for the industry major. Rival automobile companies such as Honda, Ford, M&M and Chevrolet seem to have wisened up to the marketing imperatives on the ground and have now started playing the volume game in earnest, thus taking the fight directly into Maruti’s court. For instance, Mahindra has launched its Verito Vibe model with aggressive pricing and features to compete against Maruti’s Swift. Other players have followed suit with Honda recently launching its Amaze sedan in both petrol and diesel versions. Similarly, GM launched the Chevrolet Enjoy and Ford introduced its EcoSport model, which is priced aggressively against Maruti’s Ertiga in the compact SUV segment. 

But with consumer sentiment down in the dumps, and interest rates and fuel prices ruling high, even the new launches have failed to turn around the market spirit. Sensing the market mood, most manufacturers appear to have put off new launches of their products till such time that buying interest returns. So while the current year has seen just nine new cars hitting the market, there has however been an unprecedented 22 special editions introduced by various companies. Maruti tops the list with eight special editions in the past six months, followed by three from Ford and two from Volkswagen. While Maruti introduced the DZiRE Regal in April to save its leadership position from Honda’s Amaze, it also rolled out the Ertiga Feliz to take the Chevrolet Enjoy heads on.

But even the Regal could not buoy up the decline in sales. The data from the SIAM on entry-level sedans show the Amaze (with sales of 10,888 units) has grabbed 20.4% share in the domestic market in April-May. Meanwhile, the share of the DZiRE – which sold three out of every four entry-level sedans, last year – slipped to 68.8%. For the month of May, Maruti reported a 13% decline in domestic sales at 77,821 units, over 89,478 units in May 2012. Sales of its DZiRE model fell by 2.5% to 17,265 units from 17,707 units in the corresponding period a year ago, the first of sales declining since the DZiRE was launched in February last year.

Even sales of its fastest selling hatchback Swift has seen y-o-y decline for the first two months of the current fiscal. Anxious to defend its leadership position, Maruti has made the most significant intervention to the Swift by launching two special editions in recent months. But again, given the anemic market conditions, the Star Edition of Swift, launched in March, failed to generate excitement, forcing the company to come out with the launch of a sporty Swift RS earlier this month. Though the Swift continues to be the country’s highest selling premium hatchback, its monthly average sales, in spite of the special editions, are down to 16,000 units per month, from an earlier high of 18,000.

With sales slowing down considerably and its special editions of popular models failing to excite the market, Maruti plans to bolster its prospects by launching a reported compact SUV and more sedans across entry, mid-sized and premium categories. But these plans will have to wait till the market starts showing signs of a revival. Till such time, the only option for Maruti is to defend its leadership position through smart marketing and aggressive promotion. And the company has a lot and much stake in the market to fight for. After all, it still has the best products in various segments, that too at a decent price, which continue to be best selling in their segments, aided by with largest dealership network in the country.

To reinstate the dominance of its models, particularly that of the DZiRE in the domestic market and fend off competition from the likes of Honda’s Amaze, Maruti has taken to organizing several promotional activities in recent months. When Honda launched Amaze at a competitive price tag to directly challenge the DZiRE and boasted about its model offering the greatest mileage in its segment, Maruti immediately hit back by organising a “DZirable Mileage Rally” across 30 cities in India. With fuel efficiency being one of the key factors that the Indian car customer looks at before considering a buy, Amaze’s claim of being the most fuel-efficient car in its category has become the model’s most attractive feature and offers the most credible challenge to Maruti’s DZiRE. According to the ARAI, the Swift DZiRE petrol gives fuel efficiency of 19.1 km per litre, which is 1.1 km more as compared against the Honda Amaze. However, the Amaze diesel is the most fuel efficient car that offers 2.4 km more fuel efficiency than the Maruti DZire.

Realising that it pays to engage, connect and build a long-term relationship with its customer base, Maruti has also turned aggressive on web marketing and has gone all out to woo customers on the digital platform. Aiming to attract younger Indian consumers, Maruti recently unleashed an innovative digital campaign, Maruti India League, on Facebook and YouTube, that ran through the duration of the IPL 6 tournament. The campaign, conceptualized and designed as an online cricket game, allowed the brand to engage and interact with cricket fans by drawing them into an online cricket game comprising teams representing popular Maruti car brands. “It gave viewers a chance to show off their loyalty for their loved brand from the Maruti Suzuki stable – engaging them over a sustained period of time until the end of the IPL tournament,” says Manohar Bhat, VP – Marketing, Maruti Suzuki India, adding that the campaign allowed viewers to experience Maruti’s brand communication through an interactive, topical, and exciting engagement rather than a typical advertisement format.

Such initiatives have helped Maruti to leverage the advantages of its brand value and years of consumer trust, helping it pull through today’s difficult business climate. Despite the slowdown, the company has still been able to increase its market share marginally y-o-y in May 2013. Clearly, despite diminishing sales, Maruti remains a formidable incumbent to beat and its rivals will need to come up with ingenious go-to-market plans to compete against the leader.

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Issue Dated: Feb 5, 2017