Suzuki plans to in­tro­duce two more brands in In­dia

Hindustan Times (Patiala) - - Business - Malya­ban Ghosh malya­[email protected] n

Suzuki Mo­tor Corp. is ex­plor­ing the pos­si­bil­ity of hav­ing two more brands in In­dia, tak­ing a leaf out of its Ja­panese ri­vals Honda Mo­tor Co. Ltd, Toy­ota Mo­tor Corp. and Nis­san Mo­tor Co. Ltd that sell ve­hi­cles un­der more than one brand name.

All ve­hi­cles pro­duced by Maruti Suzuki In­dia Ltd, the coun­try’s largest car­maker, cur­rently sport the Suzuki badge. What the com­pany is de­lib­er­at­ing is to carve out Nexa, its pre­mium chain of deal­er­ships, into a sep­a­rate brand, with ve­hi­cles un­der it pos­si­bly sport­ing a new badge in the fu­ture. The com­pany is also eval­u­at­ing the pos­si­bil­ity of a third brand to at­tract con­sumers in the 25-35 age bracket, two peo­ple directly aware of the de­vel­op­ments said, re­quest­ing anonymity.

Suzuki and Maruti are dis­cussing the re­vamped strat­egy, which they feel is crit­i­cal for the lo­cal unit to main­tain its dom­i­nance of the In­dian mar­ket through 2030. If im­ple­mented, this could be one of the most sig­nif­i­cant ini­tia­tives of Suzuki in its more than three­decade-long pres­ence in In­dia.

“This strat­egy will be use­ful for Maruti Suzuki since they need to evolve as a com­pany to sell 4-5 mil­lion ve­hi­cles by 2030 and such a step is needed to stay ahead of com­pe­ti­tion,” said the first per­son cited ear­lier. “Suzuki may also get some of Toy­ota’s ve­hi­cles in the Nexa brand as part of the col­lab­o­ra­tion.”

Toy­ota and Suzuki have a pact to sell each other’s cars in In­dia. While Suzuki will sup­ply its pre­mium hatch­back Baleno and com­pact sport util­ity ve­hi­cle Vi­tara Brezza to Toy­ota, Suzuki will source Toy­ota’s pop­u­lar sedan Corolla and sell it through the deal­er­ship net­work of Maruti.

The Nexa chain of pre­mium deal­er­ships was formed by Maruti in 2015 to sell its pre­mium ve­hi­cles such as the Baleno and the S-Cross cross­over ve­hi­cle. Maruti gar­nered nearly 20% of its to­tal sales vol­ume in FY19 from Nexa deal­er­ships.

The process of build­ing a sep­a­rate brand for Nexa would start from 2022-23, when the life cy­cle of the cur­rent prod­ucts in Nexa would come to an end, said the two peo­ple cited ear­lier. Maruti sells its other mod­els through the Arena net­work of deal­er­ships.

Ac­cord­ing to the first per­son, Maruti Suzuki needs to have a sep­a­rate brand as it will be dif­fi­cult to sell at least 4 mil­lion ve­hi­cles from a sin­gle chan­nel. Glob­ally, com­pa­nies have fol­lowed this struc­ture so that they can at­tract cus­tomers for prod­ucts at dif­fer­ent price points. Toy­ota has the pre­mium brand Lexus as well as the Dai­hatsu minicar brand. Nis­san sells cars un­der the Nis­san, Dat­sun and In­finiti brands, while Honda has its name­sake as well as the Acura pre­mium brand.

A spokespers­on for Maruti termed the de­vel­op­ment “in­cor­rect” in re­sponse to emailed queries sent on May 7.

Puneet Gupta, as­so­ciate direc­tor of ve­hi­cle fore­cast­ing at IHS Markit, said In­dian con­sumers had shown tremen­dous con­fi­dence and trust in the Nexa chan­nel and this would also help Maruti move into the next or­bit of 2 mil­lion cars an­nu­ally in the next year or so.

“Nexa as a brand can be a mas­ter stroke to tar­get pre­mium cus­tomers. Con­sumers are full of as­pi­ra­tion these days and prod­ucts need to be dif­fer­en­ti­ated not only at the distri­bu­tion chan­nel, but also from the qual­ity, fea­tures and tech­nol­ogy per­spec­tive,” Gupta said. “We feel this is a must strat­egy in case Maruti Suzuki wants to sus­tain their mar­ket share above 50% in In­dia as a sales group.”

The Nexa brand has man­aged to con­sol­i­date Maruti’s po­si­tion in seg­ments such as pre­mium hatch­back and cross­over, where cus­tomers did not pre­fer the com­pany’s prod­ucts ear­lier.

In FY19, whole­sale dis­patches of the Baleno rose 11% to 212,330 units, while the S-Cross posted a 22% in­crease to 37,822 units. Sales of the Ciaz sedan, how­ever, fell 22% to 46,169 units. The sec­ond per­son cited ear­lier said that once Nexa was sep­a­rated as a dif­fer­ent brand, the ve­hi­cles would share the same plat­form but have sub­stan­tial changes in the rest of the struc­ture and this would be quite chal­leng­ing for Suzuki’s en­gi­neer­ing depart­ment.


Suzuki is look­ing to spin-off Nexa, its pre­mium chain of deal­er­ships, into a sep­a­rate brand.

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