M&M's lead narrows in utility vehicles

Maruti, Hyundai gain with new models; M&M's share dips to 29%

Retaining market share usually gets tougher for the market leader when a segment sees explosive growth. Utility vehicle (UV) major M&M is finding itself in a similar situation, as the dominant player in the segment has been unable to hold on to its market share despite posting a double-digit growth in volumes.

Consider this: From a formidable 42 per cent share in the domestic utility vehicle (UV) space a couple of years ago, M&M’s share is now below 30 per cent. The key reason behind this change is a marked and successful entry of the top two domestic car makers, Maruti Suzuki and Hyundai, into the sports utility vehicle (SUV) space in last 15 months or so.

The two have had a blockbuster product each in this segment: Creta by Hyundai in July 2015 and the Brezza launch by Maruti in March this year. Maruti’s crossover S Cross, launched in August last year, also falls in the UV classification by industry body Siam.

Maruti has almost doubled its share in the UV segment from 13.75 per cent in H1 of FY16 to 24.6 per cent in H1 this year. Hyundai, too, has expanded share from nine per cent to 13 per cent.

However, leader M&M has seen its share shrink from 35.5 per cent to 29 per cent. This decline comes even as the company launched three new vehicles in the last 14 months. These are TUV300, KUV100 and NuvoSport.

“If you just take the UV segment, our growth of 14.5 per cent in H1 this year is lower than industry (which grew by 40 per cent) due to the launch of new products. We cannot retain market share when the competition is all out in the UV space. However, we have the widest product portfolio at different price points that gives us a confidence that we will retain leadership,” said Pravin Shah, president and chief executive (automotive) at M&M.

But market leader in the domestic car industry, Maruti Suzuki, has defied the argument that the biggest player must lose share when market expands. In FY16, it expanded market share to 46.8 per cent in passenger vehicles (cars, vans and utility vehicles) compared to 45 per cent in FY15. M&M is the third largest passenger vehicle player after Maruti and Hyundai.

Shah said the company would keep bringing newer products to expand its range. “Our network reach is solid and we have good brand recognition. All our vehicles are UVs in the true sense.”

Utility vehicles were in the past mostly preferred in semi-urban and rural areas due to their tall stance, high ground clearance and strong built. A new trend has set in over the last three-four years and urban buyers have started buying utility vehicles. Many companies (Ford launched the EcoSport, Renault introduced the Duster and so on) launched compact SUV that incorporates the comfort of the sedan and offers latest features.

This has expanded the overall UV market. In H1 of FY16, one of every five passenger vehicles sold was a UV. Now, one of every four vehicles sold is a UV.