Maruti Suzuki's market share an aberration by global standards

In no other country is the leader in passenger vehicles at even a third of the total or increasing; here, it's over 50% and rising

There is an aberration in the Indian passenger vehicle (cars, vans and utility vehicles) market, the world's fifth biggest and one of the fastest growing.

The largest player, Maruti Suzuki, not only sits on what is considered an abnormally high market share, compared to market leaders in other big markets. It also continues to expand on its market.

Maruti is now at a market share of 50.4 per cent, up from 47.3 per cent last year. Compare this with some other top markets and the leader there. In China, the world's biggest market, Volkswagen is the largest, with a share of 17 per cent. In America, the second biggest, GM is leader with 18 per cent. In Japan, home to Maruti's parent, Suzuki, the biggest player, Toyota, has 28 per cent. In Germany, fourth largest, Volkswagen is leader with 21 per cent. Ford leads the British market with a share of about 12 per cent.

In none of these is the leader a share even close to a third. Most hover at a fifth or even lower. One exception is South Korea, where Hyundai with sister brand Kia is estimated to have a market share in excess of 60 per cent. Industry experts said Koreans prefer to buy a Korean brand and there have been restrictions on import in the form of trade barriers. Smaller entities in South Korea include GM Korea (former Daewoo) and SsangYong (owned by Indian automobile major Mahindra & Mahindra).

What distinguishes Maruti Suzuki? "It's doing a reasonable job to retain and grow its share. They have a first-mover advantage and Indians are quite comfortable owning a Maruti car. They (the company) are not making any mistakes. More, they are enjoying a virtuous cycle of costs going down and volume going up. This is a position no other player enjoys," said Wilfried Aulbur, managing partner of consultancy Roland Berger India and head of the its Asia automotive practice.

Maruti has been able to expand market share in each of the past six years. From 38 per cent in FY12 (when it faced labour unrest), it grew to nearly 47 per cent in FY16. With operations commencing at the Gujarat factory early this year (owned by parent Suzuki), it has overcome capacity constraints and further expanded share to over 50 per cent. Nearest rival Hyundai has a share of about 16 per cent. About a dozen others, including leading brands like M&M, Honda, Tata Motors and Toyota, together own 33 per cent.

Maruti has, to a large extent, shed the image of a small car maker, marking a strong presence in the bigger and premium segments through its Ciaz, Brezza and S Cross. This also helped improved the average realisation. Profit in 2016-17 was a record at Rs 7,337 crore, about 37 per cent higher than the previous year.

Maruti's growing volume and better than industry growth (15 per cent against the industry's eight per cent) have triggered a surge in its stock price. The scrip hit a new high of Rs 9,345 at the BSE on Monday, giving the company a market capitalisation of Rs 281,177 crore. The share has risen a little over 70 per cent since January. Analysts continue to give a 'buy' call and with Rs 10,000 as the next target price (estimate of where it would go) for the stock.