2020 Auto News Auto News Indian automobiles Maruti Suzuki The Automobile News

Hatchbacks Make a Comeback, Put Maruti Suzuki in Driver’s Seat

The automobile industry is clearly struggling with sales due to lower discretionary spending against the backdrop of the COVID-19 pandemic. However, the hatchback segment seems to have bucked the trend, and industry experts say this could benefit India’s largest carmaker. The rise in demand for hatchbacks is seen as a positive for Maruti Suzuki Ltd as its segment portfolio of WagonR, Swift, S-Presso, and Celerio is not only the biggest in the Indian market, but also commands better brand value.

Higher prices of new diesel hatchbacks due to adoption of Bharat Stage-VI emission norms, a lower gap between the prices of petrol and diesel, and better fuel efficiency of BS-VI-complaint petrol engines have been a major factor why customers, especially fleet operators, are buying petrol hatchbacks, a stronghold of Maruti Suzuki. Additionally, fuelled by the growing need for personal mobility following the COVID-19 pandemic and with the government’s push to move away from the use of diesel vehicles, the demand for hatchbacks has once again outpaced other segments.

In Jul-Sep, industry sales volumes of mini and compact cars rose 52% and 13% on year, respectively, which is significantly higher than the 4% on-year rise in sales seen for mid-sized passenger cars, data from the Society of Indian Automobile Manufacturers showed. Sales of utility vehicles rose 21% on year during the quarter, while those of executive passenger cars fell 64.5%. While SIAM does not provide data for the hatchback segment separately, sales of hatchback cars make up around 75% of the sales volumes in the mini and compact car segments in India.

“Demand for Swift and WagonR has sustained despite the company not offering diesel variants of these vehicles,” an analyst at one of the big four accounting firms told Cogencis. “This is an indicator of competitive pricing, fuel efficiency and the company’s brand value.” Maruti Suzuki also stands to gain from its massive rural presence. Rural customers prefer buying hatchbacks as they are cheaper, have better and more trusted brand reputations, are easier to drive on rural roads, offer better fuel efficiency and lower running cost, and usually have no waiting period post launch, a Delhi-based market expert said. The company currently has around 3,000 sales and service outlets in India, which gives it a fairly comprehensive reach across the country. This, along with its better after-sales service due to easy availability of parts and proximity of service centres, makes Maruti Suzuki the preferred choice for many first-time buyers.

The maker of the WagonR benefits from lower competition in the hatchback segment when compared to other segments such as sport utility vehicles. Automakers, including Mahindra & Mahindra Ltd, Ford Motor India Pvt Ltd, Tata Motors Ltd, and Honda Cars India, exiting or limiting their hatchback portfolio to just one model over the past three years has significantly reduced competition in the segment. Maruti Suzuki’s dominance in the segment is also clear from the fact that the company’s WagonR and Swift models have featured in the top five best-selling cars in India in the months following easing of lockdown restrictions–July, August, September, and October. The only other hatchback to feature on this list has been Hyundai Motor India’s Grand i10 Nios, which has appeared on the list twice since July. “In the past three years, most companies shifted their attention to the SUV segment, but Maruti has continued to strengthen its hatchback portfolio with new launches and is seeing the benefits of it now,” another market expert said.

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