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April 6, 2010

INDIA: Maruti Suzuki expects market to grow faster than expected

Maruti Suzuki India said it expects its domestic automobile market to grow much faster than projected to reach annual sales of 4.5-4.6m cars by 2015, up from less than 2m cars a year at present.

Maruti Suzuki India said it expects its domestic automobile market to grow much faster than projected to reach annual sales of 4.5-4.6m cars by 2015, up from less than 2m cars a year at present.

The company also admitted that it may not be able to hold on to its 50% market share as companies such as Toyota , Volkswagen , Nissan and Renault increase their investment in the country.

Mayank Pareek, Maruti Suzuki’s executive officer, marketing and sales, told The Hindustan Times : “The industry is on the verge of attaining the critical mass, which is required for the jump to the next level. Looking at the demographics, we will far exceed the 3m sales figure projected for 2015. My bet is that industry sales could be as high as 4.55-4.6 m.

“At that level, market share loses meaning. Our aim is to be in a dominant leadership position.”

The domestic industry has grown by 13% over the past five years, making it the second fastest car market in the world behind China. Currently there are 14.5m  families with household income of overINR200,000 a year (US$4,500). This number is expected to grow and reach 49m.

Pareek added: “Of this 49m many will have a household income between INR200,000 and INR500,000 (US$11,250) making them consumers for cars. We will predominantly remain a small car market despite all the theories of market graduating from small to big cars. At the end of the day, the Indian consumer will always look for value for money.”

The bulk of the competition is concentrated in the premium hatchback segment where Maruti is the leader with the Swift and Ritz . Though new entrants like the Ford figo and Chevrolet Beat are priced well below, Maruti has refused to join the price war.

Pareek said: “We do not believe in reducing prices except when an excise cut is announced.”

Maruti’s sales and service network is also set to get sharper with increased volumes. “In 2009-10, we aggressively expanded our sales and service network and my ultimate aim is to have 1,500 dealerships so that the company has a presence in every small town with a population of 50,000,” Pareek said.

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