Decoding Maruti Suzuki’s ‘Small is Big’ Theory and why it works – Times of India

This article is authored by Shashank Srivastava, Senior Executive Officer (Marketing & Sales), Maruti Suzuki India Limited
The hatchback segment has always dominated the sales charts with a whopping 45-48% market share until FY20-21. However, the contribution dropped to 38% in FY21-22. Some may wonder then, why Maruti Suzuki has recently launched yet another hatchback – the All-New Alto K10. Here’s a look at the Company’s carefully planned strategy.
It was 40 years ago that Maruti Suzuki started its journey and in the process began paving the way for the Indian automotive industry. Four decades ago, owning a car was a distant dream for the average Indian citizen. It was a time when introducing multiple products appeared to make little rational sense. Maruti Suzuki, however, adopted a bold strategy and went on to introduce a range of different types of cars. A move that revolutionized the Indian car market.
Maruti Suzuki’s new range of cars in the 80s made the dream of owning a car a reality for the masses. Many people aspired to own a car and the brand represented a set of technologically advanced, rationally economic, and durable automobiles in India. Over the years this value set contributed significantly to the large customer base for Maruti Suzuki cars that the brand enjoys presently.
Spreading the ‘Joy of Mobility’
India being a developing economy, also demands affordable personal mobility for the masses. This is because the public transport system of developing countries is also at various stages of development.
More so, in a country like India, the population base is very young, 65% of Indians are below the age of 35 years. This means that there is a huge demographic of young people joining the workforce every year. Based on this, first-time car buyers will keep emerging as the economy moves ahead.
A statistic to note here is that 48% of new car buyers enter the Indian automotive industry every year. Demand for personal mobility then will continue to rise as more and more people enter the workforce and seek private vehicles. It is here that we continue to expect the hatchback segment to grow and do well. The All-New Alto K10 is the latest in our portfolio to provide a refreshed appeal to the segment by enhancing the versatility of an entry-level hatchback.
The ‘Small is Big’ Theory
In the Indian automotive industry, the hatchback segment has always been the leading segment with up to 47% market share in the past. It was only last year that the hatchback segment’s share came down to 38%. This is mainly due to the price sensitivity of buyers in this segment owing to the pandemic-hit economy, price increases and customers holding on to their new car purchase decisions.
Once the economy improves and customers’ income levels go up in this segment, hatchback sales are once again projected to move upwards. This is why Maruti Suzuki continues to strengthen its hatchback portfolio to cater to a market that is still very important for a country like India.
Just to give you an insight into the relevance of hatchbacks in India, Maruti Suzuki sold 7,87,853 hatchbacks in FY21-22. This was nearly 59% of MSIL’s total sales. The company dominated the overall hatchback segment with 68% market share, accounted for by 7 of its hatchbacks on offer.
India is the 4th largest automobile market in the world. But only 8% of Indian households own a car against 90% of American households that own a car. So the potential for growth is huge, especially for the hatchback segment in India.
In order to highlight the huge popularity of hatchbacks in India, here’s a look at the various types of customers that the segment caters to:
– 77% of hatchback buyers are first-time car buyers
– For 47-50% of buyers, it is the first car in the family
– 9% buyers are additional car buyers
– 14% buyers are replacement buyers
– 80% are two-wheeler owners
Among the top 10 selling cars in India, the top 4 were hatchbacks last year. When it comes to entry-level hatchbacks, Maruti Suzuki sold 1,45,767 units of the Alto last year. This is 21,637 units more than the best-selling SUV from last year. The introduction of the All-New Alto K10 with enhanced capabilities is expected to add a further boost to the overall Alto volumes and reshape the sales charts.
To sum it up, the 77% of first-time car buyers mentioned earlier is a very important customer base here. And as I said earlier, only 8% of Indian households currently own a car in India. Maruti Suzuki has been thriving on the ‘Small is Big’ phenomenon, a theory that is likely to continue to thrive.
Looking ahead, the company plans to continue creating new segments and sub-segments while upgrading its existing portfolio of products. A look at the two of our latest offerings – the All-New Alto K10 and Grand Vitara, is enough to know that the Company has a very carefully planned, confident market strategy. One that has been developed to cater to every need of the Indian car buyer, while keeping up with the times in terms of technology, design and safety.
*All data points are reflective of MSIL’s internal study
Disclaimer: Views and opinions expressed in this article are solely those of the original author and do not represent any of The Times Group or its employees.

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