Toyota to change its ‘Fortune’r!

Toyota has officially announced the launch of the ‘next-gen’ Fortuner on 7th Nov 2016. Fortuner has undoubtedly been the most successful flagship model for Toyota and we have huge expectations from the upcoming model. Recently it has been challenged by Ford’s Endeavour and did lose the top slot of the segment to Ford. The lower numbers of Fortuner was also attributed by Toyota’s plan to reduce its own and dealer inventory.

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The next-gen Toyota Fortuner is based on the new the ‘Toyota New Generation Architecture’ (TNGA) platform, which also underpins the new Innova Crysta. Toyota claims that the SUV is lighter and stiffer and promises improved ride quality, handling, and safety. In terms of looks, the new Fortuner comes with a host of design and cosmetic changes – It’s sleeker and looks much agile.

Fortuner has always been a ‘HOT’ seller for Toyota and was no product could ever-emulate its success since the launch. Even Endeavour currently is far behind the volumes that Fortuner had gained in its best times. In 2013, Fortuner garnered ~1,500 units/month! The volumes for a >Rs.25 Lakhs costing product was humongous and made the competition look lame. The butch looking SUV made a niche for itself and contributed significantly to Toyota’s & Dealer’s overall profitability. Fortuner’s dispatches to dealers started since Aug’09 and has sold over 96k units till date! Let’s look at its sales journey over years –

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With Toyota’s timeless quality and reliability factoring in with the New Fortuner – we expect the upcoming model to help regain its ‘Fortune’ and move the model to the Top Slot in the segment again.

Automotive Industry Trends

We read an interesting article on Economic Times with a similar topic and thought of presenting Auto Punditz’s view on the same. See what ET had identified as the Key Emerging Trends in the Indian Automotive Industry:

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We agree to the trends highlighted by ET; however we would want to rank it differently and is as follows:

  1. Word of ‘Digital’ – Though ‘Word of Mouth’ is still an important decision making criteria for the car buyer; Researching on Online Media has become an extremely influential tool prior to buying a New/Used car. We thus derive the term – Word of Digital to signify the impact Digital Media is making for a new buyer. Several comparison & review sites have blossomed in past few years and are seeing strong readership growth – No wonder 75% of buyers are Researching online in these sites before buying a new car.
  2. Petrol Resurgence – We had presented a statistical analysis on the subject a few days back and believe that Petrol models are the future and are going to dominate a much larger pie in overall sales. The Market Leader – 69% of Maruti Suzuki sales is currently contributed by Petrol models! Model-wise numbers is as shown – 4
  3. ‘UV’ology – The segment has grown a whopping 98% YoY; whereas the overall Auto Industry grew 11%. Significant volumes were added from the offerings of two biggest OEMs of the subcontinent – Maruti (Brezza) & Hyundai (Creta). Surprising is Brezza’s volumes with only Diesel offering as of now! See how the segment has grown –1 UV’s are leading the way for the double digit growth posted by the industry  and has proved to be extremely crucial in the volumes spur.
  4. Drive Automatic – AMT, CVT, Torque Converters and DSGs are collectively changing the way Indian’s are travelling! Don’t believe us? Than this fact will blow your mind – 57% of overall Skoda Rapid’s sales came from AT variants in Sep’16! Also a staggering 21% of overall Honda India’s Sep’16 sales was from their Automatic variants in the portfolio! Worsening traffic conditions in the subcontinent and more members of the family driving the car (ease of driving) are the primary factors for the increase in Automatic’s sales.
  5. ‘She’ is the man! –  Women today account for upto 12% of overall car sales, twice as much as five years ago. Not only that, the female of the household are emerging as the key influencer(s) in the purchase. Don’t be surprised that a car buyer prospect is not buying a car because his wife/girlfriend/mother does not like the brand/color/shape of the car! With increasing influence of Women power; automatics sales have also seen a hike. And so is the sales of Compact SUV’s seen an increment.
  6. Which Car? – Any segment should do! – Car buyers are not hesitating to explore higher segments (if value is sought). Ex: A friend of mine planned to buy an Alto, and ended up buying a Dzire instead. Seeking long term-value, consumers these days are ready to upgrade to higher segments and not keeping themselves restricted to a particular segment. Word of Digital is also proving critical these days, where buyers are influenced to buy other segment brands/cars.
  7. Power of ‘FINANCING’ -While entry level car buyers are inherently budget conscious, buyers up the segments are ready to flex the purchase cost. That’s the reason the tagged costly cars (like i20, Creta, Innova, City, etc) are doing exceptionally well in India. The reason being ease of ‘Financing’ – one would need to pay a meager Rs.2100/mth additional for extra per lakh financing. For Example: If a customer decides to buy a Hyundai Creta instead a Maruti Ciaz (and assume that the price difference is Rs.3 Lakh) – he/she will end up paying an additional Rs.6,300/month additional in the EMI than the planned EMI for Ecosport (considering a 5 year loan and interest of 9.5%). Aggressive promotion of pre-approved loans and other depreciation benefits also end up supporting a new car sale.

Indian 2 Wheeler Sales Figures – Sep 2016

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Source: AutocarPro

Model-wise Sales Statistics:

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Top 25 Two Wheelers for Sep 2016 –

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SNAPSHOT:

  • Hero Moto Corp reported its highest-ever monthly sales for September 2016! The company sold 674,961 units last month, up by 11 percent YoY (September 2015: 606,744). Its previous highest was recorded in October 2015, when it had reported total sales of 639,802 units.
  • Honda also reported its best-ever performance for September 2016 🙂 Breaching the 500,000 unit mark for the first time in its history of Indian operations, Honda’s monthly sales skyrocketed to 569,011 units (including exports) in September 2016.
  • Yamaha recorded highest-ever sales milestone in the history of its operations in the country for the month of September 2016. The company, which has been consistently growing month-on-month on the back of surging demand for its scooter models, has breached one-lakh unit mark in September including its domestic as well as export sales for the first time.

Petrol v/s Diesel Car Sales – Maruti Suzuki

We have been receiving multiple requests to share the Fuel-split Sales Statistics of cars. While we couldn’t compile for the entire industry, we are happy to present the same for Maruti Suzuki (which now contributes near to 50% of overall car sales in India). And yes, the results are surprising! Lets look at the statistics for September 2016 first:

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In Sep’16, 67% of Maruti Suzuki sales was contributed from Petrol variants and remaining 33% from Diesel variants. Offlate, the Indian consumers have inclined towards Petrol models due to marginalizing price difference between the two fuels and the excess price to be paid for Diesel models. But, Sep’16 was an exception or the trend has caught up strong in the Indian market. The last 6 month sales numbers will put better light on the same:

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  • The high Petrol sales for Maruti is also due to the Petrol-Only models in the portfolio (Alto, Wagon R, Gypsy, Omni & Eeco)
  • Apart from the Petrol-only models, these models have extremely high Petrol variants sale : Celerio (94% Petrol) and Baleno (80%)
  • The AMT variants also make a substantial contribution in Petrol models (we do not have any concrete statistics currently)
  • The petrol share is bound to increase with the launch of petrol variants on these models (Brezza, S-Cross)

We believe that the paradigm shift of consumers towards Petrol is going to stay and slowly Diesel cars are losing the competitive advantage.

Indian Automobile Industry – Back in Track?

The first 6 months of the current Financial Year (Apr’16-Sep’16) has been extremely promising for the Indian Passenger Vehicle Industry. PV Sales in India saw a growth of 12.34% vis-a-vis same period last year and posted a volume of 14,94,039 units. Sep’16 especially was encouraging as well – where the sales grew 19.92% and attained the highest volume in over four and half years! Sep’16 car sales stood at 2,78,428 units as against 2,32,170 units in Sep’15. The overall growth was fueled by strong numbers in UV segment and the segment in particular grew by 40.24% in the first half of the fiscal (3,73,504 units compared to 2,66,339 units in the same period of 2015-16). Seeing the trend, we had termed the word ‘UV’ology and find the detailed report here.  Other segment sales grew by meager 5.11% at 10,26,526 units in the April-September period as against 9,76,586 units in the same period of previous fiscal.

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With the current pace, India is poised to cross 30 Lakh units sales this year. It’ll be the first time India will achieve this milestone and is touted to overtake Germany as the world’s fourth largest automotive market! Let us look at the world’s top Passenger Vehicle Markets basis 2015 sales –

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Along with sales numbers, find included the population of the respective markets to highlight the potential India is currently at. We strongly believe that the Indian Auto Industry is at the inflection point of growth and shall see remarkable progress if supported by positive government policies and increase in disposable income of general public.

RIP – Ritz in Peace!

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Maruti Suzuki Ritz was internationally known as the Suzuki Splash. It was jointly developed by Suzuki Motor Corporation and Adam Opel AG. The name Splash was dropped in India as it was already registered by Ford (though we haven’t seen any Ford Splash yet!). The car was launched in India in the year 2009 and was recently in 2016 Maruti guys decided to discontinue the model in the sub-continent. Some interesting history about the compact car –

  • This car has been yet another success for Maruti, with more than 200,000 Ritz on Indian roads within the first 37 months of release, all this without the support of any sort of advertisement campaign.
  • Ritz was launched as a direct competition to Hyundai’s i10. However, the Korean product always had an edge due to much premium interiors.
  • Off-late, with both Petrol & Diesel Avatars the car couldn’t sell as per Suzuki’s expectation and has been phased out gradually in international markets. It was discontinued in Europe in late 2014, being replaced with the new Suzuki Celerio (starting from the summer of 2015). It was also discontinued in Indonesia in June 2016.
  • In India, we expect the Ignis to replace Ritz in the portfolio. Ignis will be made available in the Indian market during Jan-Mar 2017 timeframe.
  • Maruti tried the best to sustain the model – even the Ritz Tour was launched as a mid-life effort to hike the numbers. However, the strategies did not give the desired result.

Maruti Ritz was an extremely practical car and looked smart as well. However, the sales numbers had never been ‘magical’ enough for Maruti. We present the sales statistics for the model since its inception:

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  • Ritz garnered its all time high-volume in the first month of its launch! It could never cross >8k sales numbers post May 2009. Also it could touch >7k units sales only thrice in its lifetime.
  • We have seen  a trend where Maruti Suzuki discontinues a model if its sales drop below 2k units consistently. The trend was earlier seen in A-star and Zen Estilo. Maybe the model isn’t viable enough to the manufacturer?
  • Even the diesel offering wasn’t lucrative enough for the buyers. The petrol-only Wagon R sells phenomenally more than the Ritz!
  • Even though Ritz sales was less than Maruti’s expectations – Its average sales was more than the overall sales of several OEMs in India (Ex: GM, Skoda, Fiat, etc)!
  • Ritz sold 3,58,631 units in the Indian subcontinent till date!

We at Auto Punditz wish a dignified farewell to the brand and wish the upcoming Ignis the best. Hope Ignis is capable enough to stand on the Indian consumers expectations and build a name for itself.