Maruti invades UV market, M&M seeks to regain 'domination'

Claim top spot with Brezza, which became the most sold domestic UV last year, toppling M&M's Bolero

The domestic utility vehicle (UV) segment, an age old turf of M&M, is seeing the rise of a new leader. Maruti Suzuki, perceived to be a small car maker for long, has managed to claim leadership position in this fast growing segment on the strength of Brezza, which emerged as the most sold domestic UV last year by replacing M&M's Bolero. Brezza remains on a waiting list even after more than a year of its launch.

Maruti's cumulative sales of UVs to its dealers since November last year has been a few hundred units more than M&M, data from the Society of Indian Automobile Manufacturers (SIAM) show. The Suzuki controlled car maker sold 129,020 UVs in domestic market, almost 500 vehicles more than the 128,534 units sold by M&M. In four of the last seven months, Maruti sold more UVs in domestic market than M&M.

UV is the fastest growing segment of the domestic passenger vehicle industry (which also includes cars and vans). It grew at 30 per cent in FY17 against the sub four and two per cent growth in cars and vans, respectively. One of every four passenger vehicles sold (three million units) in domestic market is a UV. While the market grew at 30 per cent, M&M's sale was flat last year. This brought the company's share to 29 per cent in FY17 from 38 per cent in the previous year. None of the top three most sold UVs (Brezza, Hyundai Creta and Toyota Innova) in domestic market during FY17 was a M&M product.

Maruti's share expanded from 16 to 26 per cent. Hyundai and Ford also gained share. In the first two months of FY18, M&M's share has come down further to 27 per cent while Maruti is a clear leader with a 31 per cent share in the segment. Maruti is learnt to be working on expanding its UV range to further grow volumes.

M&M points to the changed market dynamics. Veejay Ram Nakra, the company's senior vice president (sales & marketing-automotive) said the UV segment saw almost 20 new products in the last five years, resulting in expansion and fragmentation. "Last year alone the segment saw six new launches at different price points. This is the key reason behind the loss of our market share," he added. He also attributes the decline to external factors like demand for petrol UVs (where M&M's presence is small) and demonetisation which impacted the company's key buyers like small businessmen, farmers, small enterprises and those in the real estate/construction industry.

Nakra also said that M&M is not losing its buyers to Maruti. "Maruti's Brezza or the Ertiga do not attract prospective buyers of Mahindra SUVs in any significant measure. Both the Brezza and Ertiga have created their own space. Brezza specifically seems to be drawing buyers of mini and compact cars," he said.

M&M said 'confidence' is coming back in the economy and it is seeing signs of an uplift in these segments going forward. "M&M is best equipped to gain market share as it's a full range UV player with products ranging from Rs 4.5 lakh (KUV100) to Rs 25 lakh (Rexton)," Nakra claimed. The company said it looks to maintain 'domination' in SUVs through new launches, marketing plans for existing products and expansion of reach, especially in rural markets.