Maruti Suzuki India Limited (MSIL), India’s largest maker of passenger vehicles, believes that the entry-level segment has faced short-term challenges due to a slew of macroeconomic factors, but with the economy slowly traversing on the path of recovery, the segment will bounce back. “There were multiple challenges, including the sluggish growth of incomes of those buying entry-level cars; an increase in commodity prices; stringent emission and regulatory changes, and the premiumization of vehicles with features and technologies, even if it’s not mandatory. This caused the segment to degrow because these factors took its toll on affordability,” explains Shashank Srivastava, senior executive officer, marketing and sales, MSIL.
These factors, according to Srivastava, caused a reduction in discretionary expenditure, which caused a short-term decline in sales, but the demand for Maruti Suzuki that underlies personal mobility is always there and is building, even in the midst of the Covid-19 Pandemic.
“The penetration of cars in India is very low. Our estimate shows that only 30 people out of 1,000 cars, while the number is almost 800 in developed countries such as the US, “Srivastava said, adding that public transportation in India was inadequate to meet the large plot of the work population. “There is a clear need for private mobility among Indians, and when the economy is slowly recovered, more people will switch to the car.” Srivastava’s words were also echoed by Hisashi Takeuchi, MD, and CEO, of MSIL. “The more people will buy an entry-level hatchback; the Indian economy is growing, and people’s purchasing power has also increased, “he added
But with the launch of the Maruti Suzuki Alto K-10, MSIL is also looking to cash the developing Indian demographic dividend. “Economically it makes sense. India has 65% of the population in the ambitious population of working age, and the average age is 24-25 years. With more and more people entering the world of work, there will be a request for affordable personal mobility for the first buyer, which has been 50% over the past 25 years, because the initial salary of many people is not much, “added Srivastava.