Portfolio Analysis: Maruti vs Hyundai / Kia

One of the ways of understanding how they are doing with respect to one another is to analyze their product portfolio which though similar in many segments like hatches, are vastly different in others such as SUVs and MUVs.

BHPian niranjanprabhu recently shared this with other enthusiasts.

Maruti, along with the Korean twins of Hyundai and Kia, today govern almost 75% of India's huge car market. One of the ways of understanding how they are doing with respect to one another is to analyze their product portfolio which though similar in many segments like hatches, are vastly different in others such as SUVs and MUVs.

One of the best ways to understand the strength of the product portfolio of a company is not just to check its market share but also to look at how the market itself is growing. The Boston Consulting Group or BCG, came out with the BCG Matrix (which many of us would have studied in detail during our MBA days), which plotted products on a graph with market growth on the Y-axis and Market share on the X-axis. Then using logic which again can be argued and discussed upon, divided this into 4 quadrants.

• The first would be products that are in a low growth market but hold a huge market share and are called Cash Cows.
• The second are those products that are in a fast-growing market and also hold a huge market share. These are called Stars
• The third are those which are in a high growth market but hold low market shares. These are called question marks!
• The last would be to see products in a low growth market and also holding low market shares. Such products are called as Dogs

In the BCG Matrix that I have put up here, the size of each bubble is a reflection of the numbers sold in 2021 so far for the first 3 months. I have used this as I felt it was a fair indicator in a year that is expected to exhibit very high demand.

Though we feel that the Indian car market is growing, actually in the last 3 years, we have seen a slide contributed to by factors such as BS6 in 2019 and Covid in 2020. In all this gloom, there have been segments of the market that have done very well and it has been that of the SUVs/Crossovers. At the same time markets that we take for granted and feel are doing very well like the 4 meter sedan are actually seeing volumes degrowth, most probably contributed to by the tremendous growth in the SUV segments.

I have taken the different body types of SUV, Hatch, MUV and Sedan and further classified them into Micro, Mini, Mid Sized, 4 Meter, Large, Large & Premium (Like L&K), Utility and Electric. I have calculated the 5 year Cumulative Annualized Growth Rates (CAGR) for these segments.

Let us analyze what we see here through some salient points. Before that, please note that I have added up Baleno and Glanza as well as Brezza and Urban Cruiser so that it correctly reflects the relative strength of Maruti products. Also bringing together Hyundai and Kia has been done given the fact that they share all the essentials that truly make a car and are different only at skin level. I am sure there will be disagreements on this and I humbly accept divergent PoV.

Some of my key takeaways for Maruti

Most of their products are cash cows. This means they are in a market where the units are showing a CAGR of 10% right down to a negative 31%. At these levels Maruti has a great market share but the returns will only dwindle with time until and unless certain serious changes are not brought in. IMHO, these would be, bringing in turbocharged petrols, diesels and a better choice of automatics.

• For those who love the Swift, please note that volumes within the segment are degrowing at a rate of 7% YoY though the market share in this mid-sized hatchback is a whopping 65%.
• The 4-meter sedan segment is degrowing at 11% and the Dzire stands tall over there with 53% market share.
• Even their hit car, the Ertiga along with the XL6 is growing at just 5% and has almost the entire market to itself!
• The WagonR is chugging along happily 2 decades or more after being introduced in our markets and volumes are almost steady with a degrowth of just 4%.
• The 4 meter hatchback segment too is growing at just around 7% and the Baleno+Glanza own 53% of this market. The Tata Altroz is a serious contender here and will cause more pain when their DCT automatic will get introduced later this year.
• The EECO is a great warrior that is soldiering on again for almost 2 decades in unchanged form and has a massive 62% of the MUV Utility market. The segment though is degrowing at 8%
• The Alto which owns 95% of the segment soldiers on despite volumes degrowing at an alarming 15%
• The Ignis is a mystery product which though owning 100% of the segment in which it is (KUV100 is gone), is having a degrowth of 28%!!!

Stars

The real star that Maruti has is the Vitara Brezza. It owns (along with the Urban Cruiser) 25% of a segment that is growing the highest at 51% CAGR. The sad story here is that it is precisely because of this segment that Maruti is unable to hold onto overall market share which has dipped by over 7% in the last year. Again the answers to how they could pose a challenge to the upcoming raiders as well as the now very well-established Korean Twins is something of deep debate! In my studies, I have seen that Maruti is very good in price segments that are below 10 lakhs and gets visibly uncomfortable the moment this limit is breached. The only exception begin the Ertiga/XL6.

Question Marks

The S-Cross is in a segment that is growing at 18% but has the Creta and the Seltos for competition. Again, what are the remedial measures they have to take in order to make it big here, is an open debate.

Dogs

Surprise Surprise, it's the CIAZ. The segment is degrowing at a rate of 22% and Maruti holds just around a fifth of the volumes here.

Management Consultants look at dogs as those products that need to divested away from. Even if Maruti can increase its volumes here and take a larger bite of the pie, they can upgrade themselves into the cash cow territory!

Some of my key takeaways for Hyundai/Kia

Cash Cows

• The Grand i10. Though it looks like they have done a great job, the fact that volumes in the segment are degrowing at 7% makes it Hyundai's Star Cash Cow product!!!
• The Verna has a 30% share in a market degrowing at 22%. Just hold on and make whatever moolah that can be raked till the party lasts.

Stars

Their BIGGEST stars are their SUVs today. Both the Creta/Seltos, as well as the Venue/Sonet command massive customer buy in and waiting periods, are slowly touching a year for some variants. This is a case study for competitors as to what to do. PERIOD. IMHO the hitherto unseen boldness displayed by the group (especially by Kia) in providing a wide wide choice of engines and gearboxes, coupled with a brilliant dash of features and styling added in, has made the day for the Korean Twins.

Question Marks

Surprise Surprise, it is the Elite i20. In a market dominated by the Baleno/Glanza twins, a 21% share is not looking too good. Its actually a comparative/relative thing here. On its own merits, the car has done brilliantly well, the product has seen its market share crash from almost 60% in 2014 to the sad 21% that we see today, thanks to Maruti getting into this segment. Maruti is the King of the segment where pricing is below 10 lakhs and no one can reign happily over here forever. whether it Renault's Kwid which has been dominated by the S-Presso or Hyundai's i10 which has been overpowered by the Baleno. Tata's Altroz has hit Hyundai the most leaving Maruti unscathed!

Attaching the market share info here as this is very interesting:

Dogs

Hyundai surprisingly has a couple of dogs in its manger and needs a lot of soul searching to get to the heart of the matter.

• Xcent/Aura - DISASTER with just 17% market share in a segment that is showing a volumes degrowth of 11%. I think the reason is a no-brainer. Its the design and looks. Engine-wise and autobox wise, I don't think they have any issues.
• Santro. Going nowhere really with a 7% market share in a segment degrowing at 4%.

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