Press "Enter" to skip to content

Maruti Suzuki ups the SUV game with the launch of Grand Vitara – The Economic Times

The launch of Grand is expected to strengthen India’s position in the fast growing high-ticket sports utility vehicles (SUV) segment thereby improving visibility of the company’s sales volume.

The share of passenger vehicles (PV) with a price tag of Rs 15 lakh and above rose to 15% in 2022, compared with 2% in FY18. The recent model launches by India’s largest car maker shows that it is keen to address the changing consumer expectations by incorporating new features at par with peers while shedding its age-old image of an affordable car maker.

The mid-SUV segment grew by 8% annually over the past five years compared with 1% growth for the total PV segment.

Suzuki’s exposure to the mid-SUV bracket has so far been limited even as some of the peers boast of waiting periods of 3-9 months for their respective models.

However, with the new product launches Maruti is likely to cover the ground faster since past experience shows that feature rich products at attractive introductory prices become popular. For instance, Maruti’s Baleno and Brezza models added about 10-20% of incremental volume after the launch. The latest SUV launches are expected to appeal to a significant base of Maruti customers beyond the metro regions which are willing to upgrade.

Maruti has over 3,000 retail outlets across the country. It derives nearly 43% of total sales from non-metros cities. It plans to produce around one lakh Vitara in the current fiscal year.

Vitara will be manufactured at Toyota’s plant at Bidadi near Bengaluru. Maruti Suzuki and Toyota plan to produce 18,000-19,000 units a month of the new jointly developed SUV. Of this, Maruti Suzuki plans to sell about 13,000 units a month, while the remaining will be sold by Toyota under the badge of Hyryder. This has a cumulative revenue potential of Rs 2,500-3,000 crore per month.

Maruti has also focussed on fuel efficiency, a factor which is conventionally associated with low-cost models but now gaining importance in the mid-SUV segment as well. It is one of the major reasons for Toyota’s Hyryder to attract higher bookings for the strong hybrid variant.

With the mild hybrid version, Vitara’s mileage will be around 21 kilometers per litre (kmpl). In the case of the strong hybrid version, it could reach nearly 28 kmpl—one of the highest in the category.

Maruti’s stock has outperformed the S&P BSE Sensex by 20% since the beginning of the year. At Monday’s closing price of Rs 8.613.3 on the BSE, it was traded at 23 times one year forward earnings, a premium of 5% over the long-term average valuation.