Maruti Suzuki’s New Alto K10 Shows Small Car Vital Despite Falling Share

Maruti Suzuki India Ltd. on Thursday launched the new Alto K10 as the small-car segment remains a sales driver despite losing sheen over last few years.

The K10 moniker has returned to Alto after the previous K10 was discontinued in transition to Bharat Stage VI emission norms. The new Alto comes with 1-litre K-series engine compared with the 800-cc engine of the Alto 800, which will continue to sell alongside the new model.

The K10 will also have new features such as idle start/stop system, ABS and option of five-speed automatic transmission. The pricing of the new K10 starts at Rs 3,99,000 (ex-showroom).

“This segment (hatchback) is 38% of the overall market and it is not very different from the SUV market, which is 40% of the market,” Shashank Shrivastava, executive director of sales and marketing at Maruti Suzuki, told BQ Prime. The company, with 68% share in the category, is looking for additional volumes with products like the Alto K10, Shrivastava said.

Maruti Suzuki's success in the Indian market can be defined by the popularity of models such as the Maruti 800 and the Alto, the highest selling car in India for 16 consecutive years till 2020.

Over the years, the importance of the mini segment—including models such as the Alto and the S-Presso—in Maruti Suzuki’s overall portfolio has shrunk. Its contribution to the company's overall domestic sales reduced to 15% in FY22 from 21% in FY19 and nearly 26% in FY18.

By comparison, the contribution of utility vehicles rose to 21% from 15% during the period. As the company catches up with the industry trend, the mini segment is likely to cede more space to utility vehicles. Maruti Suzuki has lined-up multiple SUV launches, with the Grand Vitara being the most recent one.

Still, small cars remain a key part of the India’s largest carmaker’s portfolio to capture first-time buyers and drive sales for its dealers.

“Cars like the Alto are a strong source of revenue for the dealers of the company,” Abhishek Jain, research analyst at Dolat Capital, said. “Even if it is not the most profitable models for the dealers, they can get the benefit from selling insurance, financial packages, spare parts and taking service charge.”

Moreover, as consumers increasingly show preference for bigger cars, rivals have mostly left the entry-market car space. That's left Maruti Suzuki as the only major automaker still selling these models, barring one or two relatively higher-priced exceptions such as Renault’s KWID.

“It is a great way to hook the first-time buyers to the brand,” Puneet, director at S&P Global told BQ Prime. They, generally upgrading from two-wheelers, make up for over 50% of the cars sold in a year, he said.

With no real competitor in the space, Gupta said, the company only stands to gain from the move.