How subsegments influence products

One area which may work in Maruti’s favour is the emergence of sub-segments. Srivastava says that “We had the hatch segment earlier with the Maruti 800, and whether you were a government official or a businessman, a young entrepreneur or family man, everybody had the Maruti 800, because the segment size was small, and there was no other product. As it expanded, we saw the emergence of different subcategories in the hatch segment,” he says. “We introduced the Zen, then the Swift which was for individual performance oriented consumers, the Ritz which was a family larger spaced hatch, the WagonR, the tall, boyish, more practical car, and then the premium hatches like the Baleno, and so on.”

His point is that as the market grew, one saw the emergence of sub-segments in MPVs. “The category was earlier on the large Innovas which came in the year 1999-2000. But then we saw the emergence of midsize MPVs also like the Ertiga, or the Renault Triber,” Srivastava says.

Similarly, SUVs, earlier were only about large vehicles such as the Tata Safari or Mahindra Bolero and Scorpio. “Then we saw the emergence of compact SUVs, the small SUVs, four metre, mid SUVs, premium SUVs, and the compact SUV market kept on growing. So, it was about 4% or 5% of the market in 2016. Now it's the largest segment, that has been driven largely by Brezza and later on by the entry of such products as Kia Sonet, Hyundai Venue, Tata Punch, Tata Nexon, Mahindra XUV300,” Srivastava says.

Once these sub-segments become large, new segments emerge but where does that leave Maruti with sedans?

“The sedan segment which was about 23-24% of the market, in 2015-16, was at its peak. It is now under 10% of the market. So it has really come down. It looks like 10% for the last one and a half years. It's in that range. Annually volumes had touched six and a half lakh units and today it is about four lakhs,” Srivastava says. “So that is one trend which is a global trend.”

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