Competition, Strikes Hitting Maruti Suzuki's Market Share

Times of India, Bangalore has come with an article on that Competition, Strikes hit Maruti's market share. Maruti's share skids on strikes, competition - The Times of India The article is posted below Quote: NEW DELHI: After enjoying over 50% market share in the country for a long time, Maruti Suzuki now stares at challenging times as frequent strikes and rising competition have weakened its grip on customers. The country's biggest carmaker's market share has dipped significantly in the last two years as newer models from companies like Toyota, Ford and Volkswagen have hit its dominance in the small car market. The company also had to deal with a fall in output due to strikes at its Manesar factory, the hub for the key model Swift hatchback. Maruti's market share in the passenger car segment has slipped almost 9% to 41.2% at the end of the April-October period of this fiscal from a commanding 50% at the end of 2009-10 (and has remained higher in years before that). The slide has happened when market share of rivals like Ford, Toyota and VW has gone up manifold, though on a smaller base. Toyota's share increased to 4.1% (in April-October, 2011-12) from 0.6% in 2009-10, while VW has seen its share rise from 0.2% to 4.3%. Ford, which has tasted success in the small car market with the Figo hatchback, has also more than doubled its passenger car market share to 4.8% from 2.2% at the end of 2009-10. So, will it be possible for Maruti to gain back the 50% leadership crown once it had. "It is difficult to regain that market share, but the company might reach 42%-43% in the overall passenger vehicle category," says Mahantesh Sabarad, senior V-P, equity research, Fortune Equity Brokers (India). "With the end of labour trouble, Maruti now has a chance of regaining some of its lost share in the market. However, they need to add more models and increase production capacity." It is not that other biggies like Hyundai and Tata Motors are not struggling to keep competition at bay. But it's the steep slide that worries analysts on Maruti. Maruti's fall comes at a time when competitors have been launching newer and more contemporary cars in its stronghold of compacts. Ford's Figo, Toyota's Liva, VW's Polo, Honda's Brio and Nissan's Micra are just some of the examples that have brought in challenge right at Maruti's doorstep. And its bread-and-butter model Alto, which accounts for almost one-third of its sales, is facing one of its toughest rivals in Hyundai Eon, a new entry-level model by the South Korean auto giant that commands an equally strong branding in India. Analysts say the rising share of younger Indians in new purchases is one reason that fresh brands are gaining ground. "I think a lot of young Indians are not so much wedded to brands. They have aspirations and prefer global brands that deliver on the price promise and cost of ownership. The changing demographics have led to changes in customer mindset," says Michael Boneham, the MD of Ford India. However, Boneham says it is difficult to pull customers away from established players like Maruti, Hyundai and Tata. "It was not easy and we had to focus a lot on being competitive. The product had to be right and the price had to be right. And these needed to be backed up by a well-spread sales and service network, apart from best-in-class operating cost structure." Abdul Majeed, who tracks the auto sector at PricewaterhouseCoopers, said, the market is only going to get further challenging for Maruti. "It will get even more competitive, especially in the small car segment. So it will be extremely difficult for Maruti to maintain market share." On its part, the car market leader has conceded that competitive pressure would be "most intense" in this fiscal. "We are aware of the rising competition and I concede that this should be a period of most intense competition for us," Maruti's managing executive officer (sales & marketing) Mayank Pareek had told TOI in an interview earlier this year just before the launch of the new Swift. Clearly Maruti needs to ensure that their portfolio is current and all their global models are sold in India. For too long they took the Indian customer for granted and short changed us on the global models. India is their largest market by far and apart from A-Star there have been no new global launches from cars built for the Indian market. They should kill the M800, OMNI (both do not meet safety/emission requirements) and also the Estilo. Introduce all their global models here and give India what it deserves. Competition are all driving in with their global models. Maruti needs to meet India's aspiration that cars sold in India and are also currently sold abroad. When one travels abroad and see the same car, believe me your self esteem goes up. You feel that you too are progressing Cheers KPS

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