Nexa is key for Maruti as it dreams of selling 2 million cars every year
NEW DELHI: Baleno, which sold 10,000 cars in December, has saved Nexa, Maruti Suzuki India Ltd’s (MSIL’s) new chain of dealerships that aims to give the mass market carmaker a premium image. Though the Baleno has an entry-level price of `4.49 lakh, it is styled like a premium hatchback, stuffed with features competing with Hyundai’s i20 and Honda’s Jazz.
But, why does MSIL need a Nexa that sells only two models — the Baleno, and the crossover S-Cross (which has not been so well received in the market)?
There is an overpowering presence of the mass market cars such as Alto, Alto K10, WagonR, Stingray, Ritz and Celerio, in the older dealerships. “It was impossible to provide a different kind of experience from the existing channel,” says Rishi Goel, who owns a Nexa showroom in Andheri East in Mumbai.
His Nexa sells 200 more cars over and above what he sold from Shivam Automobiles, his older MSIL dealership. Also, due to the two-dealership strategy, the Baleno did not cannibalise the sales of Swift, almost at the same price. “Our Swift volumes have stayed put. If both the cars were placed beside each other there would have been a direct impact,” says Goel.
However, MSIL’s intent is much bigger. Vinay Pant, who looks after product planning and market research at MSIL, explains that the third generation of car buyers had come in, and they are exposed to the retail experience of a Zara, H&M and Apple. “Just doing a car is not enough. We had to create a whole experience around retail,” says Pant.
Not to forget that Baleno has got the Apple CarPlay feature, which allows integrating the iPhone with the central console.
Maruti also took cue from the hospitality, telecom and banking industry, and introduced a relationship manager, who would help you buy the car, and be your assistant for after sales servicing.
However, all this did not help MSIL when it launched S-Cross. Within months of the launch, the car was available at a discount of up to`1 lakh.
“The price difference between the two variants — 1.3 litre and 1.6 litre — was something that the buyer didn’t see value in, so we had to do a price correction,” says RS Kalsi, head of marketing and sales at MSIL.
However, Pant is not bothered about S-Cross. MSIL’s bigger plan is to sell two million cars every year by 2020. “You cannot sell those kinds of numbers — 14-15 models — from one kind of showroom,” he adds.
Nexa has 90 showrooms, going up to 125 by the end of 2016, and another 100 will come up in 2017. As far as models are concerned, at least one car is planned for the Nexa every year, next being the new Vitara, a compact SUV to counter Hyundai Creta that has been a runaway success.
“After the failed launch of Kizashi, this is MSIL’s first serious attempt to raise the bar by offering not just a premium product, but an upgraded customer experience. Given the large breadth of MSIL’s portfolio, this is a stellar move to attract more premium customers,” wrote Sonal Gupta, analyst with UBS Global Research in her report.
Globally and in India as well, car makers are gravitating to more premium models and larger cars. “India’s average passenger vehicle (PV) size will still be a lot lower than any other major market in the world, but first-time buyers are also moving to slightly larger PVs than earlier. To that extent, MSIL is right in focusing on larger cars,” writes Govindarajan Chellappa, equity analyst with Jefferies.