Maruti Suzuki India is looking to take the war to its rivals. The country’s largest carmaker has declared it will win back its market share from competitors such as Tata Motors after having lost ground over the past three years.
Maruti Suzuki executives have pointed to a substantial increase in market share in the competitive sports utility vehicles (SUV) segment in 2022-23 where it lagged peers like Tata Motors.
Recent launches of Brezza models as well as other upgrades have helped Maruti Suzuki regain some of its mojo. The Gurugram-based carmaker is aiming to return to hey days of 2018-19 when its overall share of the Indian car market topped 51 percent.
Brokerage firm Kotak Institutional Equities believes that the company’s ambitions of recovering its market share to the peak of 2018-19 may end up being a pipe dream. Kotak Equities has a “sell” rating on the stock.
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‘Mind’ the gap
In a study conducted by Anurag Singh and Rishi Vora of Kotak Equities, the brokerage firm found that customer “mind share” could be a leading indicator of the market share for India’s carmakers.
Singh and Vora, however, also highlighted that while Google trends is an important source of data with high correlation to eventual market share of automakers other factors such as price of the car, fuel economy, test-drive experience and post-sales service also determine buying decision for customers.
“Growing penetration of internet in India and the advent of portals that make comparison between cars simpler mean more potential customers start their car purchase journey online,” Kotak Equities said in a note.
Looking at historical Google trends data as a proxy for what is occupying customers, Kotak Equities said Maruti Suzuki has been unable to achieve the mind share of customers with its recently upgraded models and new launches in the SUV segment.
Analysing Google trends data, Kotak Equities said that Maruti Suzuki’s mind share of customers topped out in the fourth quarter of 2017-18 and its market share peaked subsequently in the June quarter of 2018-19.
“While the company has upgraded its product line-up by equipping with rich features, it is finding it difficult to regain market share, given the plethora of options in the SUV segment at attractive price points from other OEMs (original equipment makers),” Kotak Equities said.
Maruti Suzuki’s market share improved at the end of the September quarter to nearly 42 percent from around 40.6 percent at the end of the June quarter despite the launch of new Baleno and Brezza models.
In the meantime, Kia Motors, which entered India in 2019, and Tata Motors have seen a big improvement in their “mind share” of customers, which has translated into subsequent gains in the market share.
“Both Kia and Tata Motors focused on narrowing the gap between affordability and luxury with a wide choice of variants per model, giving the brands vast market acceptance. Both the companies will have to focus on new offerings to keep their market shares intact,” Kotak Equities said.
An uphill drive
For Maruti Suzuki, the start to achieving dominance of the SUV segment has been solid with market share gains in the past couple of quarters but the road ahead is likely to be less rewarding, as competitors will likely step up their game and gain a march on the automaker.
“We believe Maruti Suzuki will find it challenging to recapture its lost market share as competitive intensity remains elevated in the SUV segment,” Kotak Equities said.
At 11.35 am, shares of Maruti Suzuki India were up 0.4 percent at Rs 8,881 on the National Stock Exchange.
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