Maruti Suzuki’s February sales volumes at 147,000 units were better than Street estimates, which had pegged the same at around the 140,000 mark. Boosted by the launch of entry-level S-Presso, the sales in the mini segment grew 11 per cent.
The mini segment has been a weak link in the portfolio for Maruti, as Alto sales have been on the downtrend for some time. Year-to-date (YTD) volumes in this segment are down by 34 per cent, though traction in S-Presso’s sales could arrest a bit of the slide.
The key for the Street, however, is the sales momentum in the compact segment, which accounts for more than half of its domestic volumes. Sales of WagonR, Swift, Celerio, Ignis, Baleno, and Dzire fell by 4 per cent in the month, given that the company has discontinued the diesel versions of Swift, Baleno, and Dzire. What should stabilise volumes in the segment is the refreshed version of Ignis, launched recently, and a Dzire facelift expected in April.
The 3.5 per cent uptick in the utility vehicle portfolio was a surprise, given that a sizeable portion of this portfolio is powered by diesel engines. About half of the company’s diesel volumes is contributed by the Vitara Brezza's diesel variant. With the company deciding to stop the sales of diesel variants, the segment’s sales were expected to be impacted. The company has launched the 1.5-litre petrol version of Vitara Brezza recently to tap the demand in this segment.
Analysts at Phillip Capital say the company could replicate the success of the previous Brezza model with the new petrol version, given the strong urban demand for petrol-powered vehicles, shift towards petrol in compact sports utility vehicles, competitive pricing, and comparable performance.
While Maruti has lost market share by 140 basis points in YTD sales to 50.6 per cent, given multiple launches by its competition, analysts expect it to recover its market share on the back of new launches. Analysts at Elara Capital say that non-Maruti new model launches are unable to sustain market share gains, even after the success of the initial launch.
While near-term growth could be muted, given that consumers are postponing purchases and the company is shifting to an all-petrol portfolio, analysts are positive about Maruti’s prospects as new launches and lower discounts should reflect on sales and margins in the coming quarters.
