Maruti's rivals race for market share

By Our Special Correspondent

NEW DELHI, MAY 28. The euphoria generated over the sales of passenger cars in March appear to have hit the reality check in April.

The market leader Maruti Udyog no longer looks so dominant as its competitors in the Zen segment have gone into an overdrive to notch up higher sales volumes in April. Market intelligence attributes the higher sales recorded by Hyundai, Daewoo and Indica, at the apparent expense of Maruti, to their desire to capture market share at all costs. They ignored profit margins and, in rare cases, even absorbed dealer margins and much else to corrode Maruti's leadership in the Zen segment, it is stated

The month was particularly tough for the industry for two reasons - one traditional and the other the creation of an indecisive government. March marks the end of the financial year and the industry becomes the beneficiary of a glut of orders as institutions bunch their purchases in order to avoid allotted funds from lapsing. This is a phnomenon witnessed every March and spans government departments like the Army to big institutions in the private and quasi-State sectors.

This momentary swell in March sales was given a boost by the decision of State governments agreeing to a uniform sales tax. Till then some States charge 12 per cent sales tax on cars while others were more liberal. With the prospect of higher sales tax many intending buyers advanced their purchases.

``The inventory level of Maruti as well as of its dealers went down by more than 50 per cent as people flocked to buy cars. The high demand sucked a large proportion of our stocks,'' says the Maruti Chief General Manager, Mr. Rohtash Mal. In this scenario, not only the aggressive Korean duo of Hyundai and Daewoo notched their highest ever sales figures and made their small cars a ubiquitous sight on metro roads, even sales by the venerable Hindustan Motors crossed the 3,000-mark.

April, however, brought car manufacturers back to terra firma and the realities of a reluctant customer not willing to experiment too freely. Maruti remained the market leader in all segments, even in the luxury segment where established car makers like Honda and General Motors are struggling to make a dent. But its leadership position has certainly come under siege.

Zen was the number one in the mid-segment in April and sold 6,000 plus cars but Indica, Santro and Matiz were not far behind. Santro and Indica had even closed the gap to slightly over 1,000 cars and Matiz has launched an aggressive campaign centering on its economically-priced, stripped variant which might show results this month. Maruti officials however do not think their competitors are fast approaching their volumes. Zen did not sell as many as they would have liked due to capacity constraint and they are confident that the new plant will lead to more cars being transported to their well entrenched dealer network all over the country.

``We are experiencing the pains of being a market leader. While other manufacturers are nowhere near their maximum capacity we have reached our maximum production capacity,'' points out Mr. Mal.

Although the proliferation of models in the upper end has led to a blurring of segments which were sharply defined earlier, it is clear that Esteem and Baleno of Maruti are still sweeping the field. The two models were favoured by over 1,800 customers as against Honda City's 923, Lancer's 550 and a mere 165 units sold by Cielo. Sales in the nebulous semi-luxury category too failed to match the performance by the Esteem-Baleno duo. Hyundai's Accent sold 1,702 units, Sienna 184 units, GM's Corsa 335 and its Astra 238. ``We will have to make use of every good opportunity to promote our products but we will have to seek cost effectiveness to provide value to our customers,'' said an official of a large car manufacturing company.

For all the car makers, particularly in the price conscious Zen- Santro-Matiz-Indica category, the race is for the market share. Which is why analysts feel the coming months will be exciting for auto enthusiasts as each company attempts to get more than a firmer foothold in the market. The price line for cars should hold firm and customers will be wooed more fervently through test drives and freebies and other innovative methods. While the trends in April do indicate a challenge to Maruti's upper end segment, the big picture will become clear only after a reasonable period of time.

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