What’s next for NEXA?

In 2015, Maruti Suzuki, India’s largest car maker by volume, decided to give its dealership
format a facelift. After extensive groundwork, the company identified key areas through which it
could develop a space that also opens up ground for marketing exercises. Since the launch
of Nexa, a platform for Maruti Suzuki’s premium-end cars, the brand has been experimenting
with various kinds of consumer engagements - from the mundane press activity and test drives
for bloggers to fashion show collaborations through Nexa Lifestyle. The newest addition is Nexa
Music, a platform for Indie musicians.

According to R S Kalsi, executive director, marketing and sales, Maruti Suzuki India, Nexa is for
a more evolved customer who has experienced driving a car early in her or his life. “Nexa’s
audience is sophisticated and a fast decision maker. With the new features and engagements that
we are adding, we want to take car buying experiences to the next level. I think that’s what most
of the auto players today are focusing on. The effort is to expand the pie.”

Passenger vehicles (PV) segment passed through a typical cyclical performance during 2018, and
recorded growth of 5-6%, informs Sridhar V, partner, Grant Thornton India LLP; “While broad
economics like rural growth, monsoon, fuel pricing, GST helped the growth and determined the
demand resulting in more passengers cars on the road; towards the latter part of the year issues
like higher insurance cost, lack of financing, rupee losing out against dollar did not help the
momentum and had its impact on the festival sales as well,” explains Sridhar. When he looks at
auto-marketing trends, he strongly believes, creating “experiences” is no longer restricted to
luxury auto-players. However, the key to keep experiential buzz always-on is to add freshness
every now and then, thinks Sridhar.

Within analyst circles, there has been a fair amount of debate on whether Maruti Suzuki’s laser
focus on Nexa and experiential platforms is a bit excessive, particularly when evaluated against
the objectives it set out to achieve. For instance, according to a recent report released by the
Mumbai-based stock broking firm Antique, “The success of Brezza and Ciaz (outside Nexa) and
a lukewarm response to S-Cross/Ignis launched in Nexa prove that the hypothesis of Nexa
changing Maruti Suzuki’s mass brand image is overhyped mindshare rather than a reality.”

The research further points out, “Although the units sold from Nexa channel exhibited growth of
120% each year, the underlying growth, excluding Ciaz (added in FY18) and incremental
volume from Ignis, largely mirrors the pace of showroom expansion. The Nexa volume growth
has been in principle driven by Baleno, which is Maruti Suzuki’s bestselling car with a perfect
pricing sweet spot and upmarket feel.”

Priya Ranjan, VP, Antique, is of the opinion that if a brand is unable to scale up, in terms of its
customer profile, then any experiential effort is futile. “Nexa, in particular, hasn’t made any
significant change in its customer base. The models targeted at the younger audience haven’t
given impressive results, too. The point to note here is purchase behaviour is not influenced by
experiences. It’s just an add-on. Is it helping in changing the brand’s overall imagery? In this
case, the answer is no.”
According to Ranjan, the role of the ‘Showroom’ is also undergoing a marked shift as a result of
digital interventions in the consumer’s purchase journey. He says, “Today, a consumer coming
into a showroom has done his/her research well in advance. There is a short list that they come
with. At the showroom level, it’s all about experiencing the product, and not really the other
things that brands are promising.”

Delna Avari, management consultant and former marketing head, Tata Motors’ passenger
vehicles division, has similar observations. She says, “The original premise stated for Nexa was
to build the next level of dealerships with a better customer experience; appealing to a more
premium audience. Undoubtedly, Nexa is the next level for Maruti; though not necessarily a
future-forward benchmark for the industry. They absolutely needed to upgrade their showrooms
and improve the brand connect with an upwardly mobile customer; frankly, it was a business
imperative to ensure market share growth going forward. And in this, they have partially
succeeded with Nexa.”

When we asked Maruti’s Kalsi for his thoughts on these observations, he said the company
doesn’t comment on such extrapolations. He adds, Nexa has no plans to change its strategies in
the near future and is confident about its performance.

Economic Times – Brand Equity January 05, 2019