NEW DELHI: Maruti Suzuki, India’s biggest automaker, is looking to break into the premium car segment with its new seven seater, as a growing number of buyers opt for bigger, feature-packed cars.
Maruti, known for small and compact cars that are mostly priced below 1 million rupees ($12,000), on Wednesday launched the Invicto seven seater with a hybrid powertrain starting from around 2.5 million rupees ($30,000).
The company aims to raise its brand image and enter a segment where it sees rapid growth as the purchasing power of Indian car buyers increases, chief executive Hisashi Takeuchi said at the launch.
“This is really a big challenge for us to go into this segment because we have no experience selling that sort of product so far,” Takeuchi told reporters.
But the market is evolving fast and without a premium multi-purpose vehicle (MPV), a segment it expects will grow, Maruti risks losing share to rivals, Takeuchi said.
He said Maruti was investing to double its annual production capacity to 4 million cars by the end of the decade from 2.2 million today, an expansion he expects will also double the company’s turnover.
Maruti, majority owned by Japan’s Suzuki Motor, made its name as a mass market car brand offering affordable prices and low maintenance costs. When it comes to premium cars, or those typically priced above 2 million rupees, buyers tend to turn to the likes of Toyota Motor or Volkswagen , say analysts.
Post-COVID, more Indians are splurging on bigger, fancier cars with touchscreen displays and sunroofs, driving up sales of sport utility vehicles (SUVs) and MPVs that have nearly doubled over the last five years, industry data shows.
Meanwhile, the share of small and compact cars priced below 1 million rupees slipped to 60% of India’s total car sales last fiscal year, from around 85% in fiscal year 2018-19. This is expected to fall further.
For Maruti, it has been a similar story.
Sales of cars priced below 1 million rupees fell to about 84% last fiscal year from 97% five years ago, said Shashank Srivastava, senior executive officer, marketing and sales at Maruti on the sidelines of the launch.
The company hopes the Invicto, which means undefeated in Latin, will create a premium halo that will “rub off” on sales of its other models, Srivastava said.
The bulk of Maruti’s sales - about 53% - still come from small and compact cars but this is expected to fall to 47%-48% as it launches models like the Invicto and sales of its SUVs pick up, said Srivastava.