Maruti Suzuki has ended production of the Estilo and A-Star small cars, while it apparently plans to launch a new mid-size sedan later this year. These developments point to an overhaul at the automaker as it seemingly prepares to try its luck in newer segments and with newer features.
IHS Automotive perspective | |
Significance | Maruti Suzuki has stopped production of its Estilo and A-Star small cars following the launch of the Celerio hatchback earlier this month at the 2014 Delhi Auto Expo. Meanwhile, another report claims that the automaker is planning to launch a new mid-size sedan later this year. |
Implications | The decision to end production of the Estilo and A-Star is not really a surprise and is actually a logical progression now that the Celerio hatchback has been introduced. |
Outlook | The launch of a Ciaz-based sedan will set the stage for further offerings, including a Swift-based sport utility vehicle and a crossover to be based on the SX4 platform. |
Maruti Suzuki has stopped production of its Estilo and A-Star small cars following the launch of the Celerio hatchback earlier this month at the 2014 Delhi Auto Expo, reports the Hindustan Times. The newly launched Celerio is expected to fill the space vacated by the two underperforming models. The Estilo hatchback, launched in 2006, was the successor to the popular Zen. However, the heavily modified model shared few aspects of its predecessor aside from the nameplate and failed to garner strong volumes. Sales of the model peaked at 55,100 units in 2010 and had been declining consistently ever since; its 2013 volumes were a little over 7,300 units, IHS Automotive data reveal. The model was produced at Maruti's Gurgaon facility in Haryana.
The A-Star small car was introduced in 2008 but it too saw a steady decline in popularity after its sales peaked in 2011. The nameplate registered annual volumes of around 35,000 units in each of the years after its launch, with 2011 sales at 38,000 units, but it was clearly outmanoeuvred by new offerings in later years. The model's sales volumes in India during 2013 stood at slightly above 7,100 units. Maruti's Manesar plant was the sole production base for the nameplate, which was badge engineered for Nissan for European markets (see Europe: 17 October 2013: Nissan to end sales of Pixo). However, the contract ran out last year, effectively sealing the fate of the underperforming model (see India: 23 October 2013: Maruti to phase out A-Star, plans new hatchback between Swift and Ritz – report).
Another report by business news channel CNBC TV18 claims that the automaker is planning to launch a new mid-size sedan later this year. The model is expected to be based on the recently displayed Ciaz concept (see India: 6 February 2014: Delhi Auto Expo 2014: India's biggest automotive event underlines increased focus on compact cars, SUVs) and will be priced in the range of INR900,000 (USD15,076) to INR1.25 million. Citing unnamed sources, the report says that the new car will compete with the likes of the Honda City and Hyundai Verna. In the sedan category, the automaker currently offers the Swift-based Dzire compact, the SX4, and the Kizashi.
Outlook and implications
Maruti's decision to stop production of the A-Star and Estilo models had been expected given that both nameplates had been underperforming and cluttering the automaker's line-up (see India: 8 February 2013: Maruti Suzuki mulls discontinuing Zen Estillo – report). The move is a logical progression now that the Celerio hatchback has been introduced. Both the A-Star and Zen Estilo needed replacements in the Indian market for various reasons. The Estilo, positioned as a replacement for the Zen, never proved popular, while the A-Star has been outmanoeuvred by its new competitors.
Similarly, the Ciaz-based sedan currently under development is likely to be launched as a replacement for the slow-selling SX4. IHS Automotive forecasts reveal that the model will retain the SX4 nameplate when launched towards the end of this year. The mid-size concept, as showcased at the 2014 Delhi Auto Expo, featured Suzuki's new global design underpinned by a wide chrome grille and large multi-element wraparound headlamps. With borderline premium features, the vehicle is designed to meet the growing demand in the C-segment market in India, China, and elsewhere.
Both of these developments indicate a broader overhaul under way at the automaker, which is seemingly looking to try its luck in newer segments and with newer features. Having three sedan offerings in its line-up, the automaker is no stranger to the segment. However, the automaker has had little success so far outside the realm of compact vehicles, including the Swift-based Dzire compact sedan. A case in point is the SX4 sedan, whose annual sales volumes peaked at 23,500 units in 2007, the model's first year on the market. According to IHS Automotive, the nameplate registered sales of just 5,300 units last year in India. Meanwhile, the Kizashi sedan, imported in completely built-up (CBU) form, was never seen becoming a volume seller in India. However, the launch of the Ciaz-based sedan will set the stage for further offerings, including a Swift-based sport utility vehicle and a crossover to be based on the SX4 platform. The new models are crucial for the automaker, not only from the perspective of boosting market share but also in helping it make inroads in the growing segments where Maruti is currently absent. IHS Automotive projects that the new models will help to boost Maruti's light-vehicle sales in 2015 and 2016 after a forecast decline of nearly 8% this year.