What Maruti Can Do To Protect Their Market Share?

Published by MBA Skool Team, Published on September 16, 2012

With the changing concept of product based marketing to need based marketing, consumers become the major focus for the industry. Passenger car segment is no longer exception to this. Indian automobile industry boomed like never before in recent years.In auto industry, India ranked 3rdin the world in the small car segment.

Also poor public transport system, rising family income and changing lifestyle demand of small cars is increasing considerably. Another important aspect is that Indian car buyers are getting younger day by day. Average age of Indian car buyer in 2000 was 39, in 2005 it was 36 and in 2010 it was 33. Hence there are some marketing implications regarding consumer behaviour and their needs. There are ample scopes of penetration in Indian market as only 1.5% of total population has their own car which is way less than China (4%) and Europe (40%-70%). (Kakkar)

Biggest concern

Maruti was the undisputed leader in the car segment since it started its business. Until 1998 Maruti was catering to more than 84% of market demant. Then due to the competition from local players and introduction of foreign brand, structure of whole auto industry changed. Especially in the last decade Maruti experienced a major fall in the market share in India. Market share of Maruti has decreased to 40.3% in the 2nd quarter of 2011 compared to 44.9% a year earlier. Even in 2000 market share of Maruti was 55.5%. Toyota (from 3.3% to 5.6 %) and Volkswagen AG (from 1.2% to 3.2%) eat up the market share from Maruti. Maruti have experienced a below 40% market share in the fiscal year 2011-12 for the first time in its history. They are attributing the strike at Manesar plant and skewed demand towards diesel car as the reasons for market share decline. (Amrit Raj, 2011)

Segmentation of Automobile/small car industry



Maruti’s car

Competitor’s car







Aulo, A-star, Zen, Swift, Wagon R

I 10, I 20, indica, palio



SX4, Dezire,

City, Logan, Accent, Fiesta, Verna







Camry, Accord, Sonata



Audi, Marcedes S class




Versa, magic




Innova, Xylo, Sumo


Sport Utility Vehicle


Vitara, Scorpion,CRV


Brand perception: Maruti mainly caters to the middle and lower end segment of the automobile industry. Most of the brands under Maruti’s name are from Mini, Compact and Midsize category. Hence the common brand perception about Maruti is stands for value for money. All the cars, from M800, alto to Omni, are not very premium products and do not focus on more packaging and hedonic value rather they focus on cost reduction and efficiency. Hence Maruti brand is perceived as common man’s brand.

Now the problem is personal car is very high involvement product where people expects delighter factors on the top of satisfier factors. Generally lots of hedonic attributes get attached when we move towards the higher end segment.When people buy a high quality and higher priced car, then it not only the technical aspects or functional design but also form design and prestige get attached to the buying decision. Through laddering technique it has been proven that people buy high priced car for the prestige or self-esteem values.

Now the problem with Maruti is that it is being perceived as a middle or lower segment car maker. People will never buy a Maruti car say if they compete in the premium or luxury category because the brand name itself reduce the prestige value of the car. Hence even if the car is from high end and high quality segment, it may be perceived as a mediocre car. So there is a big issue in the premium or luxury segment for Maruti to enter.This is why Maruti Kizashi failed badly.

In the entry level segment also Nano became a threat for Maruti 800 brand. Though from Maruti, it has been said that Nano is not a threat for Maruti 800 as Nano created an altogether different segment due to which Maruti is not suffering. But the fact is Nano is giving a very hard competition in the entry level segment and Maruti is thinking of phasing out Maruti 800. ( Maruti charts plan to retain its 50% market share)

Maruti is currently running below the demanded productivity. More precisely, new version of Swift crossed 100,000 bookings on 17th August 2011. Similarly lots of booking is happening, but Maruti is not capable to produce ample amount of cars as per demand. Even Swift Desire has a waiting time of seven months. The reasons may be low productivity and labour problem.

Automobile industry is one of the fastest growing industries in India. Also lots of international brands are coming up with tough competition. So it will be more difficult for Maruti to sustain its core competency of value for money in future if they can’t meet the demand on time.

Solutions and conclusion

  • Maruti can try to create a different brand name and introduce their luxury and premium products. Like General Motors introduced Cadillac to cater the need for premium segment. But if Maruti does so, one concern is that in automobile industry everybody will know that the new brand is actually under Maruti’s big umbrella. Hence there is a risk of the new premium car to be perceived as a normal car.
  • Utility vehicle segment is one of the promising and attractive one as it has demonstrated a compound annual growth rate of over 20% since last three years. Maruti was largely absent from this segment. So to tap this segment, Maruti introduced Ertiga available in both in petrol and diesel variants. They are competing with Toyota and Mahindra from the price point of view. They are expecting some market share increase due to the introduction of this new car.   (Press Trust of India, 2012)
  • All the lower segment cars are very utilitarian in nature. But when people buy cars, they mainly got attracted by some hedonistic attributes of the car. Hence one suggestion is that Maruti may focus on some hedonistic attributes even in the compact categories. For example, in the Swift desire, they may put some more hedonistic attributes and make it more premium product and position it as a premium or luxury car.
  • One of the biggest problems is that the supply chain system and production are not efficient enough. Hence they are not being able to meet the demand. Moreover a car buyer will not wait for six months or so for a normal car like Maruti. Hence even if the consumers were considering of buying Maruti car, they ultimately ended up buying some other car. Actually Maruti is still running on the old concept of cost minimization, which is effecting the product quality innovation. So, first and foremost, Maruti has to increase the production capability. For this purpose, they wanted to scale up the production facilities in Gujarat and research and development facility in Rohtak.(Times Of India)
  • As the demand of diesel cars are increasing in current situation and Maruti does not have presence baring Ertiga, they can come up with some product in B2 and SUV segments.


Competition is rising like never before in the automobile industry especially in India. Still Maruti is in the lion position having a market share of more than 40%. Maruti is still the brand name at least in India in the Top of Mind position. There are some serious problems regarding productivity issue which can be solvable easily. Once these issues get corrected, I hope Maruti will regain its market share. Once upon a time in back 80’s there were not much choice or options. But now there are 180 variants of car in India. Also car has become more of a hedonistic product rather than an utilitarian product. So maruti has to change its positioning and brand perception in long run to have a sustainable market share.

This article has been authored by from Saikat Mandal from IIM Ranchi.

Image: FreeDigitalPhotos.net

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