Climbing up the social ladder: Maruti Suzuki

Last week, in what seemed like a hastily assembled event, models walked on a makeshift ramp wearing evening gowns and black formal tuxedos, for an audience that largely comprised journalists and fashion bloggers. The collection titled ‘Tales of Indulgence” was curated by ace designer Manish Malhotra, who said he burnt the midnight oil to get the collection going in under 10 days.

The frenetic activity was meant to be an exclusive preview of what’s to come at the closing show of the Lakme Fashion Week Winter Festive 2017, to be held in Mumbai starting August 16. There’s nothing unusual in all this except that the show happened in partnership with India’s biggest car maker Maruti Suzuki.

To those who have followed Maruti’s advertising in the last three decades, it may come as a surprise. Maruti’s communication has always carefully and subtly depicted only middle class values highlighted by the fuel economy of its cars and a large happy family that it accommodates.

Associating with luxury fashion and couture will be a first for Maruti, which in this case was done for its two-year-old Nexa franchise. The Nexa brand was created specifically to sell premium cars, which already accounts for over 13-15% of its volumes and is expected to end the current financial year with sales of over 200,000 cars. Says R. S. Kalsi, executive director (marketing & sales) of Maruti Suzuki: “Fashion is ubiquitous and a designer like Manish Malhotra is someone our Nexa customers are aware of and aspire to be associated with. It is a great fit for us.”

So far, Maruti fought the volumes game, introducing a cheaper alternative to competition, thanks to its depreciated manufacturing plants and large vendor base that gave it a pricing advantage. Three years ago, Maruti shifted gears in an effort to play the value game as it found that its customers who owned a car were moving away to competitors as they upgraded from their small cars. In his speech during the launch of the Nexa brand, Maruti Suzuki’s managing director and CEO Kenichi Ayukawa said that he is now more concerned that 52% of Indians who buy a car don’t consider his company’s car.

Kalsi says that going forward he plans a whole range of programmes to showcase Nexa cars to would be customers. Already, Nexa is running a 40-week series called Baleno Wicked Weekend, centered on a music theme at a chosen hip destination in six selected cities. Baleno, a premium hatchback sold under the Nexa brand has been a runaway hit selling over 200,000 within just 20 months of its launch. That happened even though Maruti increased the price of the Baleno three times in quick succession.

Maruti’s move does come at an appropriate time. As overall automobiles sales top 3 million Maruti’s value market share was beginning to drop, albeit slowly,despite owning half the market by volumes. A similar scenario played out in the two-wheeler market, which has resulted in the top companies losing ground to a new competitor.

In motorcyles, companies like Hero and Bajaj Auto continued to service the 100-200 cc engine capacity markets, even as a growing well-heeled set of customers were willing to pay a premium for Royal Enfield “Bullet”motorcycles. Eicher Motors, which makes the “Bullet” quickly ramped up its value share of the market, though it sold a fraction of its competitors volumes. In the last three years, the market capitalisation of Eicher Motors, which makes the “Bullet”, has zoomed past both Hero Motor and Bajaj Auto. It is now the third most valuable automobile company in the country after Maruti Suzuki and Tata Motors.

Maruti’s move to expand Nexa already seems to be a step in the right direction to protect its turf. Kalsi says that, going by the footfall in over 200 Nexa showrooms in the country, 51% of the walk-in customers don’t own a Maruti car. That should make Ayukawa happy, for now.