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How Maruti Suzuki Is Shedding Its Small-Car Maker Tag

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The Alto, a low-cost mini-hatchback, is India’s largest-selling car. Compact SUV Vitara Brezza is not far behind. Made by Maruti Suzuki Ltd., the two track the change at India’s largest passenger vehicle maker.

Credited with spawning two of India’s highest-selling cars, the iconic Maruti 800 and the Alto, the share of entry-level cars in Maruti Suzuki’s sales fell to an all-time low in April-October. While the hatchbacks like the Swift remain its mainstay, higher-priced models like the Vitara Brezza and the Ciaz sedan are slowly gaining share.

Maruti Suzuki has been looking to shed its image of a small-car maker. That began with the launch of its premium range of outlets under the ‘Nexa’ brand. The efforts have started bearing fruit. After sliding to a share of nearly 40 percent in mid-2014 in India’s 21 million-a-year cars market, Maruti Suzuki clawed its way back up to 50.1 percent in April-October.

That’s partly driven by the sales of its premium cars. Every month, it sells 20,000 units of the Vitara Brezza, India’s largest selling compact SUV. That’s just behind the Alto that has nearly stagnated at 22,000.

The compact hatchback Baleno, launched in 2015, has clocked an average of 15,480 units a month during April-October, far ahead of its rivals. And the Ciaz has outsold all rivals by a wide margin.

“With new emission norms, the cost of ownership of small cars is going to go up substantially,” said Kavan Mukhtyar, partner and leader-automotive at consultancy PricewaterhouseCoopers India. With interest rates coming down and access to credit becoming easier, cars in higher segments will become more affordable, he said, commenting about the industry in general.

And sales of its higher-priced cars rise, Maruti Suzuki is making more money on every car it sells. Which means, its overall margins are at an all-time high.

And as the demand for its cars grows, the Suzuki’s Gujarat plant is helping it churn out more vehicles as it targets 20 lakh units a year by 2020, up from 14.4 lakh last year.

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