COLUMN: Is Maruti Suzuki losing the EV war?

Maruti Suzuki has enjoyed an enviable position in the Indian automobile market for decades. The company has dominated car sales in India since the 1980s, capturing over 40% market share consistently. However, recent developments have raised concerns that Maruti Suzuki may be headed down the same path as Nokia and Kodak – complacent incumbents who failed to respond to technological disruption in their industries.

So, is India’s largest automaker also making the classic mistakes of industry leaders who fall from grace by ignoring new technologies and business models?

Maruti Suzuki’s Incredible Success in India

First, a look at how Maruti Suzuki reached its current position in the Indian auto market.

The company has ruled the Indian passenger vehicle market almost unchallenged for over three decades. The company sold its first car in 1983 as Maruti Udyog Limited, a joint venture between the Indian government and Suzuki of Japan. Hit models like the Maruti 800, Alto, and Swift helped it capture 46% market share by 2000. Despite increased competition, Maruti has managed over 40% share for most years since.

Some key factors behind Maruti’s sustained dominance are its extensive dealership and service network, a wide portfolio of products at various price points, a reputation for low cost of ownership and good fuel efficiency, and a grasp of the value-conscious Indian consumer. The company has stayed ahead by frequently updating its models, entering new segments, and maintaining a significant lead in sales infrastructure across India’s towns and cities.

This success has made Maruti Suzuki very profitable, contributing over half the profits for its Japanese parent Suzuki Motor Corporation in recent years. However, the long period of dominance also seems to have bred an element of complacency and rigid thinking.

The Rise of EVs and New Competitors

While Maruti has ruled the roost in petrol and diesel vehicles, it has been slow to respond to two major shifts – the global move towards electric vehicles due to climate change goals and the entry of new competitors with EVs tailored for the Indian market.

Electric mobility is still in a nascent stage in India with EVs comprising less than 1% of total car sales. But the government plans for this to rise to 30% by 2030. Policies like the FAME scheme providing subsidies for EVs signal the government’s intent to drive adoption. Global automakers like Volvo and Mercedes have announced plans to go all electric. And Indian startups like Ola Electric have jumped into the fray.

But Maruti, despite its size and deep expertise in the Indian market, has been uncharacteristically slow. Its first EV is only expected by 2025, years behind newcomers like Tata Motors and Mahindra. Industry experts have criticized Maruti for lacking a clear EV roadmap and strategy.

New players like MG Motors and Kia have also aggressively entered the Indian market in recent years with feature-rich offerings and snatched away market share in key segments like SUVs. Maruti’s share fell to 43% in 2022 from 51% in 2016. Critics say Maruti has been found wanting when it comes to premium vehicles, tech features and electric powertrains compared to recent entrants.

Agile Competitors

The contrast is clear between Maruti’s sluggishness and the agility shown by newer players in entering EVs and competing features.

Tata Motors, for example, has taken the pole position in EVs by leveraging its ownership of Jaguar Land Rover to gain expertise in electrification. It launched the Nexon EV in 2019, and followed up with the Tigor EV in 2020 targeting the mass market. Tata has captured over 70% of India’s nascent EV market already, and aims to go fully electric by 2024.

MG Motors, owned by China’s SAIC, has also moved faster than Maruti. It has already launched one EV model, and plans to launch affordable EVs soon. It has also pioneered internet inside cars and launched models packed with comfort and tech features. Similarly, Kia has rapidly gained share with its tech-laden, boldly designed SUVs.

In contrast, Maruti seems unable to leverage its scale and distribution reach to swiftly respond to the EV and tech disruption. Critics feel it has fallen into the classic incumbent’s trap of continuing to rely on its core business of affordable petrol/diesel models while failing to invest adequately in future capabilities.

Is it Too Late for Maruti Suzuki?

Maruti Suzuki still sells 5 of the top 10 models in India. So it has time yet to course correct. But the writing is clearly on the wall based on what industry transitions in other parts of the world have shown.

Western auto majors like GM and Volkswagen also initially dismissed the rise of Tesla and the EV shift. But they are now facing an existential crisis, losing market share and playing catch-up on electrification. Nokia was the undisputed leader in mobile phones before the iPhone changed the game. But it arrogantly dismissed touchscreen smartphones, and rapidly lost its kingdom to Apple and Samsung.

Maruti therefore needs to urgently chalk out a comeback strategy centered on EVs, connected technology and new age business models. It has taken some baby steps with proposals to launch its first EV by 2025, invest in startups working on EV batteries and other technologies, and support for supplier partners to transition to EVs.

But industry experts feel this is too little, too late compared to the advances rivals have already made. Maruti will need large investments and a complete organizational overhaul to become agile enough to ride the next wave of disruption. It may even need to follow the example of some Western automakers and find a new, tech-savvy partner that can provide missing capabilities as Suzuki seems unable to catalyze this transition.

The endgame may resemble the current smartphone market with two or three major players and several smaller niche brands, rather than the Maruti dominated market of old. But by harnessing its brand strength, massive manufacturing infrastructure and distribution reach, Maruti still has a fighting chance to be one of those major players if it wakes up and takes concerted action now. The coming years will determine whether it can pull off a great Indian turnaround story and not go the way of Nokia and Kodak.

Maruti Suzuki faces an unprecedented threat to its dominance in the Indian market from the EV and tech disruption. New players have shown far greater agility in leveraging this disruption. Though it still retains key advantages, Maruti needs urgent strategic action and large investments to stave off the complacency that led to the downfall of Nokia and Kodak. It has the resources to script a comeback, but execution will be key. The next 5 years will reveal whether Maruti can rediscover its mojo and ride the next wave of auto innovation.