Indian Automotive Brands & Segments

There was a time (1980s) when we had only two Indian Automotive brands – Padmini & Ambassador. The consumers had only two options and the estimate Annual Sales used to be around 20000 numbers. Maruti pitched in the year 1983 with its legendary Alto which challenged the monopoly of HM & Premier Automobiles. Post liberalization many foreign auto makers set shop in India. Fiat, Ford, Peugeot were the early entrants into the Indian market realizing its potential. Soon we saw an upsurge in demand and our home-grown Tata Motors jumped into the bandwagon. Within a short span of 25 years the number of OEM’s in the Indian market grew to 25! The market which was churning out 20000 numbers now grew to a level of more than 20 Lakh vehicle sales annually.

With demand grew competition, so did the complications. Customers were spoilt for choice! There were so many options in the market, that it had to be regularized. Hence, SIAM decided to divide it into SEGMENTS. It was primarily a division based on the length of the vehicle. The Segmentation as per SIAM (considering the length) and the Indian Brands in the segments is as follows –
1) Mini (A1) / A Segment
The stalwart segment which boats of the most popular brands such as Maruti 800 & Tata Nano. This segment had grew very fast in the initial years of expansion of Indian Automotive Industry. It started shrinking with the formation of new segments. It was recently revived with the entry of Tata’s Nano and has also triggered other OEMs to bring products in this table. Bajaj/Nissan/Renault JV is expected to bring another offering in this segment. All would depend on how Nano sales progresses.

2) Compact Hatchback (A2) / B Segment

This is one of the fastest growing segments in India and accounts to more than 50% of Automotive Sales. This Segment has a never-ending number of brands lined up and the list keeps growing. The value-for-money, city friendly and practical qualities of products in this segment has made it the peoples favorite. We expect this segment to stabilize now and predict the dynamic growth of value for money sedans in the next few years. The Brands in this Segment are –
3) Midsize (A3) / C Segment
This segment also has many models today catering to a wide price bracket. It is classified into entry-level and premium ‘SEDAN’ categories. 2011 saw maximum launches in this space. This highlights the importance OEMs are giving to this segment and is bound to grow exponentially in near future. Models –
4) Executive (A4) / D Segment
Majority of the models in this segment were brought into the Indian market as CBU’s. As volumes increased, localization and price rationalization were the after effects. This Segment has become the obvious choice of successful professionals and stands as an attractive option between Sedans and Premium Saloons. The offerings in this segment are –
5) Premium (A5) / E Segment
The Luxury or the high end segment is the only segment which has shown signs of sustainable growth in past 2-3 years. This has attracted a lot of Premium Auto Manufacturers to explore Indian terrain and India has emerged as one of most important Strategic Markets for these OEMs.  
6) Luxury (A6) / F Segment 

The choice of CEO’s, Managing Directors and the ultra-luxurious chaffuer driven car – would be the right definition for the offerings in this space.

7) SUV / MPV / MUV

Considering the poor infrastructure and road conditions – this segment has been the most rational choice for all. This segment has always been the obvious choice for Rural masses and is still bound to grow further. With immense people carrying capacity, off-road capability, driven by diesel and with the ‘image’ factor attributed to it; it has grown leaps and bounds throughout. You’ll not be amazed to see the number of offerings in this segment –     
9) Convertible/Coupe/Supercars
This is an extension of E & F segments. With the advent of Ferrari, Bentley, Lamborghini, Porsche, etc in last few years the number of offerings have amplified. After the popularity of F1 and with the increasing number of billionaires in India, we are sure to see a much of these on Indian roads – 
The exhaustive list of Brands mentioned above are the right indicator of the Indian Automotive Growth story. But the million dollar question is – how many of the brands mentioned above are going to remain in the next few years. 
2011 also saw the demise of the iconic Fiat Palio. Auto makers need to understand the competitiveness of the Indian Market – and there is no room for failure! 

Shootout: Entry-level Luxury Bikes Segment, India

Indian 2 wheeler Market was the only rejoice in the ailing Indian Automobile Industry. While Industry experts believed that Hero Motor Corp would suffer after its divorce with its Japanese partner Honda, Hero proved all the analysts wrong by beating the market expectations. During the first half of the year Hero’s market share grew marginally to 73 percent from a market share of 70 percent last year. HMP also recorded its all time highest retails of 6.5 Lakh units in October 2011.
Now coming to the Luxury Performance Bike market in India, Hero again has been the first mover in this category. It launched Karizma way back in 2003 and can be easily crowned as India’s first ‘realistic’ superbike. It not only marked the entry of performance biking but also allowed Indian Bikers to elevate from the traditional 100cc/150cc category. But volumes were minimal, Indians weren’t ready to shell out the money just for the premium price tag and was meant unsuitable for the Indian roads.
But as our Infrastructure & Economy improved, the bike found many takers. Indian Bikers were slowly inclined towards much powerful and good-looking bikes. Larger and Meaner bikes found place in the garages of many Indian homes. Such was the craze that motivated much premium brands like Harley, Ducati, Hyosung, etc.. to set shops in Indian soil.
As we all know, Indians like to be ‘spoilt for choice’. Hence there was the launch of India’s first of its kind ‘super sport bike’ – Yamaha YZF R15. This 150 cc monster instantly won hearts over and became the face of Yamaha’s performance oriented culture. It also played a vital role in reviving Yamaha’s identity in the Indian terrain. This slowly turned out to be the crowned jewel in Yamaha’s stable. It re-defined the ways of Indian 2-wheeler enthusiasts thought about a performance bike. R15 set many benchmarks in terms of design, ride-quality, performance and overall appeal. It also proved to be a crowd puller in many of its showrooms which also improved the sales of its sister brands too.
And 2011 saw the competition heated up. Indian 2-wheeler space generated interest in Bike Manufacturers throughout the world and these manufacturers were pretty serious about the size the country had to offer. Honda’s R&D gave birth to a product that was specially designed and manufactured keeping developing countries into mind. The overall proportions of the new baby – CBR 250R never made it look like a 250cc segment bike. It put the elder siblings to shame. It was launched in early 2011 and garnered tremendous bookings in the Indian soil.
The sales numbers were as follows –
Although the overall size of the luxury bikes market accounts to around only 1% of the Industry; it is bound to grow exponentially . This is evident from the fact that Honda sold more than 11000 of CBR 250R just within 6 months of its launch – even though there were major supply issues after the Japan earthquake. And the recent upgrade of the Yamaha R15 (version 2.0) clearly signifies the seriousness of the manufacturers in this space. Even Bajaj is planning for a 250cc Pulsar anytime soon in early 2012. Also Suzuki would be launching a 250cc bike in the same space. 

Keep looking for much activity in this segment. This is obviously the most sought after space in the Indian market now (not for generating volumes, but for creating the brand for the manufacturer).

2011 – A year of Launches

Year 2011 will be always be remembered as the most crucial year in Indian Automobile Industry. It experienced the launch of segment-defining products and changed the overall perspective of the industry. No one had shaken Honda’s dominance in C-segment till date. Suddenly Fortuner fears its dominant as the most sought after Premium-SUV position is at stake. Alto slowly seems to ‘let it go’ and out of the blue entry-level car segment isn’t all that “entry-level”; we have an offering that oozes a lot more style/premium-ness than its costlier competitors.

A brief line up of the launches in 2011

  1. Hyundai’s all new fluidic design philosophy was showcased by the launch of New Fluidic Verna. With the right pricing, attractive design and striking diesel variant, it overtook Honda’s indomitable City within months of its launch
  2. Mahindra’s target to become an aspirational brand was strengthened with a giant “Cheetah” leap – XUV 500. The XUV ‘five double ohh’ not only re-defined Mahindra’s engineering process but also welcomed to the league of PREMIUM car makers. This surely has provided M&M a strong foundation before the launch of its international brands in lieu with Ssangyong.
  3. We were all anticipating a worthy competitor to the King of entry-level hatchs. Hyundai’s codenamed HA was one of the most awaited launch of the year. The product was launched as EON. The fluidic design philosophy was carried over by Verna and the breakthrough pricing has made it all more luscious. 
  4. Ford after its success of Figo, wanted to replicate the same with its sedan offering – Kinetic Fiesta. The Fiesta had already tasted success internationally and the extrovert Kinetic design was a sure eye-turner. But the product couldn’t really make a dent in Indian Scenario due to over-the-box pricing and cramped interior space. 
  5. Maruti’s second generation Swift had a Blockbuster launch. The longer and roomier swift has garnered over a lakh bookings till date. But the labor unrest at the plan disturbed the deliveries and has left a majority of its customers waiting for it.   
  6. Renault launched two of its premium offering – Fluence and Koleos. While both the products couldn’t bring numbers to the auto maker; Renault surely wants to build its image as a Premium Car Manufacturer. 
  7. Nissan’s Micra and Sunny proved to be instant successes. Even with its petite dealer network it has amassed an average of more than 1000 numbers for Micra and Sunny. As its network expands, we can expect more numbers and newer product launches.
  8. VW wants the top OEM slot internationally by 2018. India as a market plays a very vital role for VW for turning its vision to reality. Hence it has been very aggressive in its strategies in the sub-continent. Be it dynamic network expansion, break-through marketing or slew of launches – VW is trying all means to gain the market/mind share. This year Vento allowed VW to establish itself as a serious competition in the lucrative C-segment. Even the new Passat marginally increased the numbers and stood a threat to its sister brand Superb.
  9. Skoda is leaving no stone unturned to churn numbers in Indian Market. It has learnt from its mistakes and have implemented its learnings this year – a price cut was seen in its hatch-offering ‘Fabia’. Also the Octavia-replacement ‘Rapid‘ is expected to be priced competitively. With its mini-limousine type space and the Skoda badge, we expect the Rapid to heat up the competition in the C-segment.
  10. The Firodia’s led company launched the Force-One. The premium SUV has the design cues from the Chinese Guangdong Foday and the Benz-engine had high hopes from the product. But again the value-conscious Indian market couldn’t see value in the offering and the mass-mover brand image of Force acted as hurdles in its way to establish Force One as a Premium SUV.     
  11. Toyota’s ambitious ‘Made for India’ products Etios and Liva was also made public this year. Toyota’s expansion plans in India is backed by these two products. Toyota has almost grown more than 50 percent this year. Although both the Etios & Liva are bringing numbers to the Japanese car maker; but in sight to get the prices down the quality has degraded as well.  
  12. Honda’s new hatch ‘Brio‘ has a lot of expectations riding on it. With a competitive price and cute looks it has already harvested more than 5000 bookings.  
There were also some very exciting launches in the Luxury Car space. My personal favorite was the Indian launch of Range Rover Evoque. I believe there would be no other car in the world that would be as similar as its prototype/concept model. 
We expect the trend of launches to continue in 2012. Around more than 50 launches are planned this year. The Snapshot is as mentioned below –
Indian Car Launches – 2012

Analysis of the Indian Automobile Debacle

Everyone is discussing the downward trend of the Indian Automobile market. While India is in the hotlist of all the top OEM’s of the world; the recent downfall in the sales chart has raised a lot of questions on the lucrativeness of the market. The volatile trend is not a good sign. Analysts believe that the trend is to continue for another 3-4 months without any signs of revival. This has made the investors wary and the manufacturers scared. This amidst the fears have forced the OEM’s to announce heavy discounts in November and I’m sure the same will continue for December.

The most attributed reasons for the downfall are:
          *Rise in Interest rates
          *Increase in fuel prices
          *And Labor Agitation in the biggest Automaker

The bad times even got worse with the last point mentioned in the above list. Maruti Suzuki is reeling to supply the vehicles according to demand and the labor issues in past 3 months have hit the production hard and has turned out to be the worst nightmare in MS’s history. This had a direct impact on the company’s sale and was even reflected in its Q2 results – the company saw a fall of almost 59.8% in its profit. MS used to be the mascot of the Robust Indian Auto Industry and its decline in profits raised many eyeballs. Even though with an exhaustive booking list for its new Swift (almost a lakh booking), the signs from MS aren’t too upbeat.
October 2011 Passenger Car Sales Figure – OEM wise
India’s two biggest Automobile manufacturers MS & Hyundai experienced a de-growth of more than 52% and 5% respectively. Although the reasons for the de-growth in MS was explicit; Hyundai’s downfall was worrisome even after the launch of its much awaited Eon. The industry was expecting a boost in Hyundai’s sales chart after Eon’s arrival. 
While the growth of VW, Toyota, Ford and M&M was a sigh of relief for the industry. With festivities around these OEM’s performed as they were expected to do. The growth was primarily pushed by the introduction of new products in their stable – Polo & Vento for VW, Etios & Liva for Toyota, Figo for Ford and XUV 500 for M&M. We’re sure with the all new Brio and the re-worked Jazz will do similar wonders for Honda in coming days.   
But, the recent increase in petrol prices have again fueled the discussion on how is it going to affect the industry. And to fuel the fire, the increase in Repo rates from the RBI will also hike the already soaring interest rates. 
To explain on how these factors are going to affect the common man let us take an example of the following scenario –
From the above table the following points could be inferred –
  1. The product price (Maruti Alto) has rose a decent 2% which is acceptable.
  2. The EMI has increased by a marginal 10%. The loan rates which used to be once lucrative has now made the common man think twice before finalizing his/her purchase decision. And with the volatility of the interest rates; it has pushed many consumers postpone their purchase.
  3. A whopping 70% increase in the price of the Petrol. It is difficult to digest the fact that fuel prices have hiked unprecedentedly over just a short time of two years. As the petrol prices have been de-regulated by the government – we would not be surprised to see the petrol price touch the century mark in a nearby time.
  4. Considering all the above factors, the total cost of ownership has increased by a considerable 22%. 

We at Management Punditz do not understand on Why does the government do not think about the Auto Sector and the people associated with it and is just concerned about the Oil Companies??? We’re sure that the losses beared by the economy as a whole is greater than the losses of the Oil majors. We hope government realizes the truth pretty soon.

Trend – Diesel Price (Rs/Litre)
However to exhibit the sudden upsurge in demand for diesel cars is due to the sustained increase in prices of the diesel and the long term benefit associated along with it. Today the performance and refinement between a petrol and a diesel car is surprisingly similar. Even the maintenance costs of a diesel machine has rationalized over the period of time. This makes Diesel Cars a sensible buy for the consumers. A perfect example to describe this – Out of a lakh bookings for the new Maruti Swift; 80 percent of the customers have opted for a diesel variant.
We hope that the recessionary trend in the Indian Auto Sector is short lived and as with the array of new launches, we see the sure-shot signs of revival.        

Indian Car Sales Figures – October 2011

October 2011 Sales Figures – Pan India
·         Fortuner sales lowest in past 5 months – 763
·         Bolero – away from the recessionary trend clocks above 8000 numbers
·         Alto in its worst phase – once ruled the segment with more than 33k numbers has dropped to 15k
·         Sunny sees a brighter side – the value for money sedaaan from Nissan does impressive 1340
·         Chevrolet BEATs the heat with a successful more than 5k figure with its diesel offering (for Beat)
·         Verna stands tall as the king of C segment – again overtakes the Honda in its own game – does 4217 numbers
·         Etios proves to be a growth booster to Toyota – along with Liva gains 5851 figure
·         Micra clocks it’s all time highest 1619
·         Eon does a modest figure of 6315 and already is 8th in Top 10 selling cars of the month.
·         Brio does 1220. Honda is already busy with 6000 bookings of Brio and is reeling with components issue (due to flood in its parts/component base Thailand)
·         Sumo and Indica has their best offtake number in last 6 months – 2109 & 10812 respectively.