Alto is Maruti’s god of small things

It has been an astonishing run for the Alto since the time it emerged the top-selling car brand in 2004-05. For the last 13 years, Maruti Suzuki’s compact offering, which debuted in 2000, has been the monarch of all it has surveyed while weathering headwinds from rival models.

Launched as ‘India’s hottest little car’, Alto crossed the one-lakh cumulative sales mark in its first three years of existence (October 2003) and has never looked back since. The five-lakhmark was achieved in August 2006 while the million followed in November 2008. Four years later, came the second million sales feat in April 2012.

In February 2016, Alto reached the three-million cumulative sales mark and by March-end this year, this had grown to 3.25 million. In monthly terms, this translates into average sales of 22,000 plus Altos over the past decade.

RS Kalsi, Executive Director (Marketing & Sales), said that this distinction is clearly a reflection of the model’s popularity coupled with the fact that the company has been proactively introducing the latest versions keeping in line with technology and innovations.

“With contemporary technology like driver side airbag and convenience of auto gear shift in the K-10 model, Alto continues to bring delight to young first car owners,” said Kalsi in an interview. “It is the most affordable two-pedal technology in the entry segment.” Supported by a strong service network and low maintenance costs, Alto is a natural choice of customers, he added.

However, with more competition in the market, Alto is facing pressure from recent rivals like the Renault Kwid. This is also borne out by the fact that over the last three years, its sales have been falling year-on-year. Having reached a peak of 3.47 lakh units in 2010-11, Alto numbers were down to 2.63 lakh units in FY ‘16 and slid further to 2.42 lakh units last fiscal. In other words, there was a considerable difference of one lakh units between six years.

Yet, the fact remains that Maruti Suzuki’s market share has also grown over the years, which clearly means it has evolved beyond Alto in keeping pace with customer preferences. This is evident from the heady response to products such as the Vitara Brezza, Celerio and Ciaz. The success of these models has also helped Maruti gain acceptance in other segments like sedans and SUVs where it has had little to offer in the past.

Hence, even while small cars continue to be the company’s biggest volumes generator, it is quickly planning for the future and getting prepared to meet the challenges of tomorrow. Car buyers in India are now moving on to premium hatchbacks and SUVs, which means Maruti can ill afford to stay complacent and put all its eggs in the small (car) basket.

Does this mean that models like Alto will soon lose traction in the coming years? Alternatively, can it keep pace with rivals like Kwid which are perceived as being smarter and more contemporary? According to analysts, Maruti will be under a lot of pressure selling Alto especially with Renault experimenting a lot more aggressively with Kwid as evident in the case of the ‘Climber’, a sporty version launched last month. Like Alto, Kwid is also available in 800cc and 1000cc versions with an automatic transmission option to boot.

Where Maruti Suzuki scores is in its network with over 2,000 outlets across India but competition is getting as aggressive in this department. “Renault is playing a strong game on new design and Maruti should also be doing something similar for Alto,” says Puneet Gupta, Associate Director at IHS Markit.

This really should be no big deal to a company, which has truly been on fire over the last few years with almost every new offering hitting the bull’s-eye in the market. Its top management has also acknowledged the impact of Kwid, which means that it will pull out all stops to reboot Alto and ensure that it strike a strong chord with the new generation of young buyers. It is this lot that has queued up for smarter offerings like Kwid and it is here that Maruti will have its work cut out in making Alto attractive all over again.

In a country where car penetration levels are still paltry compared to other nations, the company will have reason to feel optimistic about its people’s car. In addition, this is the largest two-wheeler producing nation globally with over 17 million units annually. Even if five per cent of this number decides to graduate to a car, Maruti would ideally like them to consider Alto.

This would mean stepping up the drive on retail, and aggressive finance schemes to woo potential customers. On the face of it, this should not be a huge problem for a brand that has ruled the roost for 13 years in a row. The only difference this time around is that customers have become more demanding and competitive pressure has increased.

It also remains to be seen how changes in safety and emission norms will affect Alto’s performance in the market since there will be considerable investments involved that will make it a more expensive proposition in the coming years. How Maruti will strive to make the brand relevant going forward is the million dollar question.

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