Maruti Suzuki Is Trying A New Thing To Shore Up Small Car Sales

Maruti Suzuki India Ltd. is pulling out all stops to shore up sales of its small cars, including a limited edition offering—a first in four decades of selling cars.

India's largest carmaker by volume is set to launch the so-called “dream” edition of the Alto K10, Celerio and S-Presso—the smallest cars in its portfolio—at an ex-showroom price of Rs 4.99 lakh. The pricing is such because the formula for registration charges changes for cars priced at Rs 5 lakh or higher. That aside, these special edition models have features that buyers seek as standard—such as reverse parking sensors and a smartphone-linked infotainment system.

Additionally, Maruti Suzuki has reduced by up to Rs 5,000 prices of the automatic variants of the Alto K10, S-Presso, Celerio, Wagon-R, Swift, DZire, Baleno, Fronx and Ignis models.

The measures come at a time when Maruti Suzuki failed to sell even 10,000 units of the Alto K10—its best-selling car for decades.

In May, domestic car sales of the Delhi-based automaker were flat at 1,44,002 units, as against 1,43,708 units in the year-ago period. The figure does not include sales to other original equipment manufacturers (10,490 units versus 5,010 units a year ago) and light commercial vehicles (2,692 units versus 2,888 units a year ago).

• The sales of mini cars—Alto and S-Presso—fell 19.07% YoY to 9,902 units.

• The sales of compact cars—Baleno, Celerio, DZire, Ignis, Swift and WagonR—dropped 4.49% YoY to 68,206 units. The Swift underwent a refresh last month.

• The sales of utility vehicles—Brezza, Ertiga, Fronx, Grand Vitara, Invicto, Jimny and XL6—rose 17.21% YoY to 54,204 units.

• Maruti Suzuki also sells a sedan (Ciaz—730 units versus 992 units) and a van (Eeco—10,960 units versus 12,818 units).

• Exports fell 34.40% YoY to 17,367 units because the company missed a shipment amid the Red Sea crisis.

Naturally, there's an inventory build-up, most of which comprises small cars.

As on May 31, Maruti Suzuki was sitting on an inventory of 1.68 lakh units—or 35-36 days of buffer stock. That far exceeds the 1.57 lakh units the company sold last month.

Still, Maruti Suzuki said it's comfortable with the pile-up.

“The inventory level, though at more than a month, includes transit time. That should start easing once the election results are out (on June 4),” Partho Banerjee, head of sales and marketing at Maruti Suzuki, said at a virtual media scrum on Saturday.

To be sure, the inventory build-up is an industry-wide phenomenon.

Indian car dealers are staring at an inventory of up to 5 lakh units for the month of May, as demand cools off after three years of blockbuster sales. June isn't looking bright either.

“What's being reported is actually conservative. Dealers are actually sitting on 4.5-5 lakh units,” Vinkesh Gulati, chairman (research and academy) at the Federation of Automobile Dealers Associations, told NDTV Profit in a telephone interview on May 30.

But the market itself has grown to 3.5 lakh units per month. On Saturday, Maruti Suzuki said industry-wide car sales rose 4.41% year-on-year to 3,50,257 units. 

“If inventory levels were up to 4 lakh, we would have been comfortable. But they are at least one lakh more,” Gulati said. “That's not good for buyers and dealers alike, as the cost of holding inventory builds up over months.”

Maruti Suzuki also warned of muted sales growth for the rest of the fiscal.

“The industry will see single-digit growth in FY25. May was particularly bad due to heatwaves and the elections,” Banerjee said, adding that his company enjoyed a 41.1% market share last month.

The new Swift, however, is emerging as a bright spot.

Maruti Suzuki has clocked 40,000 bookings of the new Swift in just one month, despite the lack of a CNG variant, which will be launched in the coming months. About 83% of the new bookings are for the manual powertrain. Demand is concentrated in the mid-spec variants (50%), followed by the top-end (39%) and then the base model.

“The new Swift is already our best-selling model,” Banerjee said. “The CNG variant will be out in a few months. That should shore up our volumes…” That's noteworthy, since one in every three cars sold by Maruti Suzuki is now gas-propelled.