How Maruti and Hyundai plan to dominate the expanding SUV market

G Balachander Chennai | Updated on February 19, 2020

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The SUV race is heating up in the Indian passenger vehicle (PV) market with several new players joining the fray.

The SUV market has seen the entry of players such as Kia Motors and MG Motors recently and it is getting crowded. This year alone, there will be 23 new launches, of which 14 will be SUVs.

The share of SUVs in the PV market was about 14 per cent five years ago (2014-15). After the launch of the Maruti Brezza (March 2016), the total size of the SUV market started moving northwards. It is also the only segment that has grown this year.

There are three categories in play today – entry SUVs, ie, the sub-4-metre (Ford EcoSport, Hyundai Venue, Maruti Brezza, Mahindra XUV300, Tata Nexon, etc). This category has the highest volumes of about 50 per cent.

The mid-SUV segment is almost equal in size to the entry SUVs. Here the champions are Hyundai Creta, Renault Duster, Kia Seltos, and MG Hector, among others. In the upper SUVs, there are the Ford Endeavour, Toyota Fortuner and Land Cruiser Prado and Skoda Kodiaq.

In this intensely competitive SUV market, Maruti Suzuki and Hyundai seek to retain their dominance. UV market leader Maruti’s market share has dropped to 25 per cent from 28 per cent last year. This is the category where diesel penetration is high, particularly in the high-end SUVs.

Shift to petro

Maruti faces a tough task due to vanishing of diesel portfolio from its SUV line-up as BS-VI norms kick-in. Its flagship SUV Vitara Brezza will come only in petrol variants from April 1. The diesel Brezza has been a major volume driver till recently.

However, Shashank Srivastava, Executive Director (Marketing & Sales), Maruti Suzuki India, said the company’s new BS-VI Brezza will have more powerful petrol models, which, along with CNG variants, would help recover the volumes of diesel.

Meanwhile, the SUV market appears to be witnessing a similar shift that hatchbacks and sedans went through in recent years. Then more people shied away from buying diesel cars due to the narrowing price gap between petrol and diesel and higher acquisition cost for diesel models.

“The trend in petrol is gaining ground. Today with BS-VI prices it doesn’t make economic sense to buy a diesel SUV. We are actually quite convinced that due to economic reasons and higher cost of BS-VI diesel models, people may opt for petrol models in SUVs. It’s already happening,” he said.

Of course, his views reflect the trend in the market. For Hyundai’s Creta and Venue, a significant portion of sales come from petrol models. For Kia’s SUV Seltos, petrol accounts for almost half of its volumes, while in MG Hector, about 75 per cent of bookings are for petrol.

Srivastava also pointed out that people actually prefer the design of an SUV – high bonnet and driving stance, and larger ground clearance. “We have found that this SUV design preference is not only in large vehicles, but also trickle down to smaller vehicles. It is in this response that we have made the S-Presso, which is a small vehicle, but addresses the SUV design requirements,” he added.

In the mid-SUV segment, Maruti hopes to regain ground with a new S-Cross launch.

New launches help Hyundai

Hyundai has seen its SUV volumes grow post launch of compact SUV Venue in mid-2019.

With robust sales of Creta and incremental volumes of Venue, Hyundai’s volumes in the utility vehicle segment grew strongly, and during the second half of 2019, it clocked a total volume of 1.71 lakh units, which helped the company be the segment leader during the period.

Availability of diesel variants in the two successful models is also a big plus for the company. Both the models have helped Hyundai grow its market share to 19 per cent in the UV market from about 14 per cent last year.

“With Venue, Kona (electric SUV), new Creta and 2020 Tucson, Hyundai has the youngest SUV line-up in the Indian market, said SS Kim, Managing Director of Hyundai Motor India.

While both Maruti and Hyundai have upgraded their SUV portfolio, they continue to have one major edge over competition – network. The vast network of both players with strong service support is expected to help.

Also, since non-metros are gradually fetching good sales for SUVs, the network is expected to help both players grow and sustain their SUV volumes.

In 2018-19, the total SUV market was estimated at 7.85 lakh units. Of this, entry-level SUVs accounted for about 3.78 lakh units, while mid-SUVs’ volumes stood at about 3.6 lakh units.

Published on February 19, 2020

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