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Competition shaves 27% off Maruti's market share - Views on News from Equitymaster
 
 
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  • Feb 4, 2000

    Competition shaves 27% off Maruti's market share

    In what was unthinkable a few years ago has turned into reality as Maruti's market share has slumped from 78% a year ago to about 51% currently.

    MUL, a joint venture between the Indian government and Suzuki Motors of Japan, has a presence in the small car segment (800, Zen), mid-sized segment (Esteem, 1000, Baleno), and the utility vehicle segment (Gypsy).

    According to news report appearing in a leading financial daily, in January 1999, Maruti's market share stood solid at 78.6%, head and shoulders above the others. Over the first ten months of the current financial year, Maruti witnessed a significant decline in market share to 62.7% - an 18 percentage point slump. In January 2000 its (latest) market share stands at 51%.

    Maruti has done its bit to sustain growth. It slashed prices to compete effectively with Indica, it launched new models - Baleno and has a few more up its sleeve - Wagon R, Alto.

    So the company's done its bit to meet competition head-on. But while Maruti has grown, the car market has grown faster. For instance, the company's sales have grown only 5% from 25,437 units in January 1999 to 26,684 units in January 2000. In the same period, the car market has grown at 60%. Given Maruti's leadership position, its market share witnessed the biggest dent to accommodate the competition.

    The situation is unlikely to improve in the coming months. As competitors line up a slew of launches at competitive prices, Maruti will find the going far from easy. It plans to launch the Wagon R at an aggressive Rs 349,000. Response for the Wagon R is expected to be more encouraging than the Baleno, which could sales of only 328 units in two months since its launch.

     

     

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