Maruti's upcoming Brezza unlikely to help re-capture automaker's lost market share: Kotak report

India's largest carmaker Maruti Suzuki India Ltd (MSIL), which is all set to unveil its new generation compact sports utility vehicle (SUV) Brezza on June 30, 2022, is likely to find it challenging to re-capture its lost market share, reveals a report from the Kotak Institutional Equities Research.

As per the report, data from Google Trends, a website by Google that analyses the Google Search queries across various regions and languages, suggests that the Brezza facelift is doing marginally better in capturing the interest of potential buyers compared to the Hyundai's compact SUV Venue. Moreover, the data further showed that the average search intensity of the Maruti's compact SUV is still lower compared to the launches of its Baleno and Ertiga.

The homegrown automaker, which is calling the upcoming Brezza 'Hot and Techy', has suggested that it will come with several new features and tech updates over its outgoing counterpart. Maruti Suzuki is likely to announce the price of the new Brezza on June 30. Maruti Suzuki's new Brezza will go up against the likes of Hyundai Venue, Kia Sonet, Tata Nexon, Nissan Magnite and Renault Kiger.

Kotak, in its report, added, "We expect only marginal market share gain for the company in the compact SUV segment. While recent correction in commodity prices and Yen depreciation will support margin recovery, we believe the company will find it challenging to re-capture its lost market share."

Even though the upcoming Brezza facelift, in terms of Google trends, is doing marginally better as compared to the newly launched Hyundai Venue facelift, the average search intensity for Mahindra Scorpio-N is almost 2.5 times more than that of Brezza. "While we await details on pricing and features; however, we do not expect the new Brezza facelift to be the game-changer," the report added.

In India, SUVs are becoming the car of choice across consumer classes as well as for manufacturers for business growth. Currently, competitive intensity in the compact SUV segment is very high as compared to FY2017, revealed the Kotak report.

In FY17, there were only two offerings in the compact SUV segment as against the currently more than 6 offerings. "Given the category is well established with multiple offerings across attractive price points and rich features by various OEMs, the brokerage believes it will be challenging for Maruti Suzuki to enjoy the similar success of FY17," added the report.

"There is a correlation of 0.6 and 0.7 between 1M average search intensity and subsequent three-month and six-month sales respectively of the newly launched models. While we expect Brezza sales for the company to pick up in the coming months; however, we expect marginal market share gain in the compact SUV segment for Maruti Suzuki based on Google Trends data," reads the report.

Despite the launch of Celerio and Baleno refresh, Maruti Suzuki's domestic market share, excluding sales to Toyota, hasn't seen any improvement. Over the past three months, Maruti Suzuki's market share has hovered around 42-43 per cent.

Maruti Suzuki, with the new launches, is trying to catch up on the new trends including connected technology, premium sound systems, sunroofs, heads-up display units, and 360-degree view cameras.

Maruti Suzuki's key challenge has been its mid-size SUV segment, where it has only a 5 per cent market share. However, the automaker would soon be launching a mid-size SUV along with Toyota to address tackle this issue.

"While we expect the company to gain market share gain (+8-12 per cent), we remain concerned on lack of diesel offering by the company (~60 per cent of the sales in mid-size SUV is pertaining to diesel powertrain) given consumers preference for higher torque. While the company will be offering strong hybrid solution instead of a diesel powertrain, higher upfront cost as compared to ICE vehicle may impact the strong hybrid category penetration," stated the Kotak report.