is the hatchback segment dying a slow death? the shifting sands of india's auto landscape

Maruti Suzuki chairman R C Bhargava said that hatchback segment is getting affected by higher cost of acquisition and rising inflation.

Beneath the stellar profit reported by Maruti Suzuki is a sad story of the growing irrelevance of the hatchbacks, which were once the bread and butter of India’s largest car maker.The decline in the hatchback segment continues and has been exacerbated by high inflation affecting the purchasing power of those who either want to purchase their first vehicle or upgrade from a two-wheeler.Maruti Suzuki chairman, R C Bhargava, reiterated that the focus is now shifting to what the customer wants – SUVs.”Next year, there will be degrowth in the hatchback segment. The purchasing power of hatchback segment has been affected and hence, is not growing. The production capacity will come down from 70 per cent to what the market needs,” Bhargava said.There is a clear shift in the demand in the passenger vehicle segment with more and more people opting for SUVs. Maruti Suzuki wants to regain its lost market share by ramping up its focus on the SUV segment.Bhargava said that major demand is coming in for the SUV segment. The response to its newly launched Grand Vitara and Brezza are an acknowledgment that consumers are thinking beyond hatchbacks.Mid-sized SUV Grand Vitara showed strong sales of 4,800 units in its debut month of September. Its compact SUV offering Brezza is selling like hot cakes. The new generation Brezza sold 15,445 units in September ahead of its rivals Tata Nexon and Hyundai Venue.The rise and rise of the UV segment has forced a rethink among major automakers. Bhargava said that the composition is changing in favour of the higher end. He added that Maruti will do everything for bigger vehicles while maintaining that small vehicles still form a major part of the business.”Higher competition in the SUV space and slow revival in the entry segment still remains a concern. Production levels for the company are almost back to normal levels as the chip issue is largely addressed. However, market share gains remain key for Maruti, due to the competitive intensity in the UV space. Maruti has lost significant market share over the last few years (41% in Sep-22YTD vs 51% in FY19),” said Prabhudas Lilladher in a note.What can swing the market in Maruti’s favour is the hybrid path that it has adopted. This could be a game changer as the electric vehicle segment reels from lack of charging infrastructure. The strong hybrid variant of the Grand Vitara has 24,000 pending bookings out of a total of 60,000 for the model.
Maruti Suzuki plans to roll out its first electric vehicle in 2025. Bhargava said that the automaker is doing it in a systematic manner ensuring more of localisation and putting the customer first.

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