Maruti to Add Small Goods Carrier Amid Competitive Intensity

Maruti Suzuki India Ltd. (MSIL), the nation’s biggest carmaker by volume, said it plans to introduce a light commercial vehicle amid intensifying competition in the passenger vehicle segment.

The board of the local unit of Suzuki Motor Corp. (7269) decided two days ago on the new vehicle, which will compete in the lower end of the market, Maruti Chairman R.C. Bhargava told reporters in New Delhi today. The vehicle will be offered in both gasoline and diesel engine options, he said without providing a date for the introduction.

Maruti is facing increasing competition as automakers such as Nissan Motor Co. (7201) unveil new models in a market where industrywide car sales in the year ended March posted their biggest decline since 2001, while the light-commercial goods carrier segment expanded 16 percent. The carmaker’s revenue in the June-ended quarter missed analyst estimates after its local deliveries in the period dropped 6.8 percent.

“There is a promising outlook for the light commercial vehicles,” said Bhargava. “Maruti will grow its passenger vehicles business separately, but growing another segment provides for inbuilt de-risking.”

The company will probably use technology available with its parent Suzuki to develop the new vehicle, Bhargava said without elaboration.

Maruti will compete with Tata Motors Ltd. (TTMT), India’s biggest truckmaker, Mahindra & Mahindra Ltd. and Ashok Leyland Ltd. for a share of the small goods carrier market. Local deliveries of light goods carriers increased to 476,734 units in the year ended March, according to the Society of Indian Automobile Manufacturers.

“Maruti, because of its deep penetration and understanding of the market, will have an advantage and they can get a good market share,” said Umesh Karne, an analyst with BRICS Securities in Mumbai. “The retail segment will drive LCV sales because urban markets are dependent on the hub-and-spoke model.”

To contact the reporters on this story: Karthikeyan Sundaram in New Delhi at kmeenakshisu@bloomberg.net; Tushar Dhara in New Delhi at tdhara1@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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