Let us Judge Cars by its Sales (Volume)

New Launches Performance Analysis

It is always too early to judge the performance of any new product based on early sales figure, as there could be production and delivery stabilization going on in the background. But a full year is good enough to do so.  So let us have a look at the performance of mass market products launched in the year 2016. Cells highlighted in green are doing exceptionally well, whereas orange indicate growth, but far less than expected and red ones are warning signals for respective manufacturer.

Maruti Vitara Brezza

Blockbuster! This time Maruti got the shape right with such small size, unlike S-Cross. Design seems to be inspired by Range Rove Evoque and that is working big time for Brezza. Packaging and pricing is spot on. Given the lifestyle oriented personality of Brezza, it makes more sense, to be sold through premium dealership of Maruti, called NEXA. But as per media report, Maruti’s traditional showroom owners protested against the move, hence it is sold through regular dealership. Does that mean, it is the product that counts and not the showroom ambience? That’s food for thought, keeping in mind the investment which goes into setting-up NEXA showroom.

Toyota Innova      

After 11 long years Toyota decided to bring in new generation of Innova. Price has gone up, so is the premiumness, engine & transmission options and power output. Numbers are stronger than ever before. It is astonishing to see how Toyota got the right recipe for high margin product which is MUV! It is just a pipe dream for others.

Tata Tiago

It is an indication that, personal car buyers are returning to Tata’s showrooms to buy cars, as 80% of Tiago sold are petrol powered. YoY sales grew by 60%, no wonder if it breaches 9,000-10,000 monthly sales mark and catapult Tata in 3rd spot. Indica did the same for Tata Motors in late 90s and Tiago seems to be perfect replacement for Indica.

Toyota Fortuner

New gen Fortuner’s sales numbers is astounding. Lexus inspired design makes it feel more contemporary, still it retains old school SUV charisma. With every passing year it has gained more buyers, except for 2016, which is transient phase. Similar to sibling Innova’s story, it is just a pipe dream for competitors.

Hyundai Elantra

In terms of numbers, it even cannot hold a candle to its predecessor. It’s not product’s fault. Rather it is the segment which is dying. Essentially it is fighting a lost battle. Appetite for sedan in the price band is over as buyers are craving for SUV.

Skoda Superb

Segment itself is on decline due to SUV onslaught in same price band. Still Superb is able to sell little more and expand the segment too. It is handsome, has nicely appointed interior, lots of space and modern gadgets, what essentially buyers look for. Audi A4 or A6 is just glorified Superb, so just imagine how much value for money it is. Jokes apart, 60% of Superb sold are petrol, that’s a surprising departure from the usual diesel dominance. Does that mean people are buying it for thrill of TSI engine?

Honda Accord (Hybrid)

It cost around ₹ 45 Lakhs (Ex-Showroom), for ₹ 1 Lakh more, you can buy Jaguar XF diesel. Need we say anything more? With high level of taxes, Government has already thrown the idea of hybrid vehicle out of window, to favor pure electric powertrain. So, if Honda really feels that there is demand for Accord like vehicle, then, they should transplant a diesel engine, or else keep on wasting money on importing hybrids, which virtually has no takers.

Datsun RediGo

Redigo shares the platform with Renault Kwid, but it is not as successful as sibling. Whereas Kwid styling is inspired by SUV, Redigo looks like highly modified Tata Nano, wearing Datsun family look. There it loses the plot. 2k monthly average figure will go downhill only.

Mahindra KUV 100

Mahindra’s second attempt to enter hatchback segment, with an investment of ₹ 1000 Crore. First was Verito Vibe, a notchback based on Verito (earlier Renault Logan). Since SUV is flavor of the season and very much in DNA of Mahindra, hatchback was styled as mini SUV. But side profile was not pleasing to look at, feels like design team was more inspired by frog, unlike XUV which was inspired by Cheetah. This segment is dominated by petrol engine and buyers are spoilt for choice with refined products since long time. As first attempt to build petrol engine, KUV 100 was having many rough edges. Fuel economy was dismal due to larger capacity AC and ECU mapping, and owners complained of vibrations in higher gear ratios namely 1st, 2nd and reverse. Thus numbers took a dip and Mahindra started course correction, quickly followed by an update, as KUV 100 NXT. Seems that is not working too.

Volkswagen Ameo

By the time VW developed a sedan to take advantage of 4m length based tax structure, by doing some genetic mutation of existing Polo and Vento, segment leader Maruti Dzire has not only raised the bar with 3rd generation product, but also changed the rule of the game. VW must better go back to the drawing board (or Genetic Lab) with new Polo and Vento, slated to be launched in late 2018.

Honda BRV

It is just reincarnation of Honda Mobilio, which now has borrowed dress from City and high heel sandals from CRV to fit in the definition of SUV rather than MUV. Sales graph trajectory is similar to Mobilio too. High time for Honda to shelve the Brio platform and stick to successful City platform for future product development in India.

Hyundai Tucson

Sometime when companies become too overambitious, they fail to learn from their own past mistakes or hate to acknowledge one. Hyundai did not learn anything from Santa Fe, which you will find later in this analysis. Tucson seems to be overpriced by at least ₹ 3 Lakhs. Why marketing team made a tradeoff to let the product die rather than slashing price and giving it a new lease of life. If they think that such a move will hurt the brand, then, they must think on the write-off on investment they have to make when a product die, even before the normal lifecycle end(usually it is 6 years in India). Seems they don’t invite their accountants for product review meetings.        

Mahindra NuvoSport

It started its journey as mini Xylo, also known as Quanto. Xylo itself was not very good looking. Wonder how they designed Xylo? They brought in hulk looking Scorpio in design studio and hammered it from all the directions, till it started sulking. Quanto failed miserably because of looks. Still Mahindra didn’t lost hope and rechristened it Nuvosport, gave it nice looking face, but awkward body style remain the same, hence one more failure. When TUV 300 was already there in the pipeline, then what sense it makes to invest on Nuvosport.

2017 – Discontinued Products

Honda Mobilio

Honda has built its brand by selling highly desirable products like City, Civic and Accord. All were premium and that is buyer’s perspective. But then, in order to get into volume segment, it decided to sell mass market hatchback Brio. It was not premium at all, as per Honda’s the then standard.  So every product built on that platform met the same fate, Mobilio became victim in 2017, as Honda insisted on premium pricing. It was pricier than segment bestseller Maruti Ertiga, but interior felt cheaply made. Its soul is not entirely dead, rather it reincarnated as an SUV called BRV, which you will find in the first table, standing again with a red flag in hand.

Hyundai Santa Fe

It lost all its steam within three years of its launch. Over ambitious pricing took a toll on its number. Younger brother Tucson is in first table, might appear in this table next year for very same reason.

Renault Pulse & Scala

Pulse and Scala are basically Nissan Micra and Sunny, respectively, wearing just a different color of tie, but asking higher price (20k to 60k). Product planners at Renault must have been very convinced that Indian buyers will simply pay premium, just because the car is having a Renault logo on bonnet instead of Nissan. But Indian buyers didn’t.

General Motors – Chevrolet

Not every year you will witness a car company winding up sales operation in India. But General Motors, owner of Chevrolet brand did that in 2017. Still they retained manufacturing plant near Pune and started exporting left hand drive models to Mexico, South America and other nations. GM has retrenched from Europe as well, by selling out Vauxhall and Opel Brand to PSA France. Detail analysis is available here – Source. We simply don’t want to see Nissan and Fiat doing the same next year.

 

2017 – Launches

Next year same time we will check the performance of below products, launched in 2017.

Lexus

Imported Lexus SUV were quite popular in India when Mercedes Benz M Class was only Luxury SUV sold through company’s dealership. As several luxury car makers set their shop in India, around 2005, charm for imported cars started waning. Lexus is now very late to the Luxury car party. Brand has entered in India with mostly hybrid product portfolio. All the products are imported so price is quite exorbitant in comparison to competition. Local assembly is also on cards by leveraging parent Toyota’s plant near Bangalore.

Brand has not generated much excitement though, just like when Jeep entered India in 2016 with hefty imported price tag.  Sometimes Lexus is also called glorified Toyota. For example Lexus ES model launched in India, priced at ₹ 58 Lakhs, uses drivetrain quite similar to ₹ 37 lakhs priced Toyota Camry Hybrid. Design language is very futuristic, more sci-fi kind, but front grill design is very polarizing, either you love it or hate it, even you can ignore it, as there are many good looking luxury brands on sale in India.

(The article is written by the Newest Pundit on the team – Rohan Rishi. You can connect with him at emailrohanrishi@gmail.com)

Honda’s Best Selling Car in India!

Yes, you guessed it right! We are talking about Honda City. Honda recently announced that it has sold over 7 Lakh copies of City and indeed it was a big feat for the marquee. We decided to review the journey of this legendary sedan and are happy to present the findings –

  • Honda has sold 7,04,857 units of City in India till date in the past 236 months!
  • It is still one of the oldest model to have survived the product life cycle in the Indian market. Even legendary brands such Maruti 800, Hyundai Santro couldn’t evolve the way City has done so far.
  • City registered its ever highest sale of 9,777 units in the month of March 2015! However, it is yet to cross the 10k/month sales landmark in the Indian market.
  • The best year for City was 2015 where it sold 82,922 units (an average of 6,910 cars/mth!).
  • City still has the highest contribution to Honda’s sales in India. For 2017 (Jan to Nov), City contributed to over 35% of Honda’s sales in India!
  • India is the biggest market for City globally! Honda sells one in every four City sedans in India.
  • Honda has launched 4 generations of the City in India.
  • The latest generation of Honda City (4th Gen) has sold over 2.75 Lakh units in 46 months and has made it the best selling City ever from Honda!

Some interesting facts about the brand globally –

  • City was originally a hatchback (compact car) and was launched way back in 1981 in Japan. And at the time of its introduction, it was Honda’s smallest car!
Global 1st Generation Honda City
  • Owing to low sales numbers globally, Honda had to retire the Second Generation compact City in the year 1994. The nameplate was revived in 1996 for four-door sedans made primarily for developing nations in Asia, Latin America & Australia.
  • From 2002 to 2008, the City was also sold as the Honda Fit Aria in Japan!
  • As on date, the cumulative sales of the City has exceeded 3.6 million units in over 60 countries around the world since the nameplate was revived in 1996!
  •  It is a compact sedan built on Honda’s Global Small Car platform, which it shares with the Fit/Jazz (a five-door hatchback), the Airwave/Partner (a wagon/panel van version of the Fit Aria/City), the Mobilio, and the Mobilio Spike—all of which share the location of the fuel tank under the front seats rather than rear seats.

Honda’s very existence in India has been defined by this model and it has stood the test of time to still be one of the best sellers in the segment. It has a cult fan following in the Indian market and yet commands one of the highest resale value amongst all brands. It’ll indeed be a difficult task for Honda to maintain the leadership category in an extremely competitive segment. As always, innovation and quality shall be the key for the same. While the next gen City is still far away (2019), we hope it continues the sales momentum in coming months.

All Four Generations in 1 Picture

Pulsar Festival of Speed – Season 3

The Season 3 of Bajaj’s Pulsar Festival of Speed is going to start from tomorrow at Gurugram. Festival of Speed is touted to be India’s 1st Stunt championship and it allows to participants to Train with professional racers like Emmanuel Jebaraj – National Champion, and the art of stunting with India’s No 1 stunt team, the Ghost Ryderz. Pulsar Festival of Speed will be spread across Delhi (Gurugram), Hyderabad, Mumbai, Pune, Bangalore and Chennai. Starting from 23rd December onwards at Leisure Valley ground, Gurugram, the festival will give Pulsar customers a chance to indulge in professional lap racing on a track setup for enhanced biking experience.

The Pulsar Festival of Speed will be spread over 2 day pit stops will be hosted at multiple cities with race track set up providing an opportunity to the Pulsar fans to participate in lap racing. The first day is entirely dedicated to clinics and the 2nd is competition and festival. Furthermore, all the amateur racing and stunting enthusiasts will get mentorship from the ace champions and riders spread over two Day Pit Stop sessions to fine tune their skills. The racing is open to all Pulsar RS200, NS200/AS200 and 220F owners in 3 separate categories while stunt championship is open to all Pulsar owners. The entry to the festival is FREE.

The festival will consist of track racing, stunt biking, live bands, Pulsar experience zone with display of new 2018 edition Black Pack Pulsars and much more. Commenting on this initiative, Mr. Sumeet Narang, Vice President – Marketing, Bajaj Auto said “The first two editions of Pulsar Festival of Speed saw spectacular response from the bike enthusiasts and as a market leader in sports segment, it’s our endeavour to evolve the landscape and keep raising the bar of customer engagement. Towards the same we are introducing India’s 1st stunt championship in FOS where the amateur stunters will get to train with best and a chance to become the 1st Pulsar stunt champion”. He further added, “As a loved brand we wanted to give biking enthusiasts a chance to fine tune their racing and stunting skills. Towards the same we are introducing pro clinics for amateur racers and stunters where they will get a chance to train with the best professionals and improve their skills.”

The festival will witness registrations by Pulsar fans to participate in races conducted over laps to choose the best 6 racers in each city. The 36 winners to then compete with each other in a Grand Finale on Kari Motor Speedway, Coimbatore to become the ultimate winner followed by prize distribution. The National Pulsar Festival of Speed Champion will be rewarded and recognized by Bajaj Pulsar with Prize Money. Similarly, the stunt face offs will help with one winner from each city and the top 6 stunters across country will then train with GRz at their training ground and have a chance to become the 1st Pulsar stunt Champion and the Prize Money.

Participants can register on https://www.bajajauto.com/pulsar/festivalofspeed/index.html

The schedule of Pulsar Festival of Speed is as follows –

 

Study – Japanese Car Industry

We were recently researching on the Japanese car industry and were fascinated by it. We thought that it is necessary to share on how a developed country’s Automobile Industry has shaped over years and where it stands right now. The automotive industry in Japan is one of the most prominent and largest industries in the world.

  • Japan has been in the top three of the countries with most cars manufactured since the 1960s, surpassing Germany.
  • The automotive industry in Japan rapidly increased from the 1970s to the 1990s (when it was oriented both for domestic use and worldwide export) and in the 1980s and 1990s, overtook the U.S. as the production leader with up to 13 million cars per year manufactured and significant exports.
  • After massive ramp-up by China in the 2000s and fluctuating U.S. output, Japan is now currently the third largest automotive producer in the world with an annual production of 9.9 million automobiles in 2012. Japanese investments helped grow the auto industry in many countries throughout the last few decades.

While we may assume that the likes of International Best Sellers like the Corolla, Accord or the CR-Vs are doing well in the market – In reality it’s not! Kei Cars have a majority pie in the car sales and dominate ~50% of the market share. Let’s see the top 10 selling cars in Japan for FY16 (Apr’15-Mar’16) –

You’d see that 5 out of Top 10 cars are Kei cars! 3 of the Top 10 are compact hatchbacks, 1 is a Minivan & the Top Seller is a Hybrid Fastback (Prius). See any similarity with the Indian market? – We have the Alto as the Top Seller (which is also a Kei car in Japan), Wagon R contributes significantly in sales in the Indian market (Trivia: The Wagon R has been the best-selling kei car in Japan since 2003; and in 2008, Suzuki produced its three-millionth Wagon R.). Also some of the Compact Hatches are also found in the Indian Market (Ex: Honda Fit which is named Jazz in India).

So , almost 47% of the sales in the Top 10 selling cars in Japan were from Kei cars! What exactly is a Kei car? – It’s a Japanese category of small vehicles under 660cc. They are designed to comply with Japanese government tax and insurance regulations, and in most rural areas are exempted from the requirement to certify that adequate parking is available for the vehicle. Cities in Japan are hugely populated and the Government has aggressively promoted Kei cars to curb on traffic and pollution. The crowded and narrow roads in Japan are also responsible for rise in popularity of these kei cars in Japan’s domestic market. But the concept of these kei cars – meaning light cars in Japanese – is almost unknown outside Japan. The situation could change now; as Japan’s top automakers are now willing to export the kei car technology to growing markets like Indonesia and India (already some models are doing well in Indian market).

While the Kei cars had an interesting domination in the Japanese market; we were also intrigued by the way Japanese origin OEMs commanded over 90% share in Car Sales!!! Japanese Origin OEMs (Automotive Manufacturers) include Toyota, Honda, Daihatsu, Nissan, Suzuki, Mazda, Mitsubishi, Subaru, Isuzu, Kawasaki, Yamaha & Mitsuoka. The Top 20 OEMs for the calendar year 2016  (Jan’16-Dec’16) were –

Source

Interesting Stats:

  • 13 out of 20 OEMs in Japan are Japanese Origin which contribute over 90% of the Industry’s volumes!
  • Toyota is the No.1 OEM in Japan and commands over 31% Market Share in Japan.
  • The volume Toyota does in a year in Japan is almost similar to what Maruti sells in a year in India.
  • Brands like GM, Hyundai, etc doesn’t even exist in Japan!

The story was pretty different before World War 2 – Ford and GM had factories in Japan, where they dominated the Japanese market. The Ford Motor Company of Japan was established in 1925 and a production plant was set up in Yokohama. General Motors established operations in Osaka in 1927. Chrysler also came to Japan and set up Kyoritsu Motors. Between 1925 and 1936, the United States Big Three automakers’ Japanese subsidiaries produced a total of 208,967 vehicles, compared to the domestic producers total of 12,127 vehicles. In 1936, the Japanese government passed the Automobile Manufacturing Industry Law, which was intended to promote the domestic auto industry and reduce foreign competition; ironically, this stopped the groundbreaking of an integrated Ford plant in Yokohama, modeled on Dagenham in England and intended to serve the Asian market, that would have established Japan as a major exporter. Instead by 1939, the foreign manufacturers had been forced out of Japan.

But post World War 2 and during the liberalization era too the American/German brands couldn’t make much difference. Was it due to Japanese protectionist policies? We say it wasn’t! While Japanese consumers love brands like Apple (iPhone remains the bestselling smartphone in Japan!); it is surprising why the brands like GM or VW fail to woo Japanese consumers. We figured out that more than the product, the differentiation was on the experience & relationship. Would like to highlight a case study describing the same –

The last time Shujiro Urata wanted to buy a new car in Japan, his phone happened to ring. It was the local Toyota dealer on the phone, asking him if he was thinking about buying a new car. When he replied in the affirmative, the dealer and a coworker showed up at Urata’s doorstep an hour later with two demo cars, which Urata and his wife test-drove around the neighborhood. The Uratas decided to buy a car from the dealer. The dealer also handles their car insurance, coming to their home whenever the insurance contract needed to be renewed. The Uratas bring in their car to the dealer every few weeks for a free car wash, where they hang out and talk to the employees, who have become their friends, about dog breeds and family birthdays.

The rapport may sound unusual to Americans, who are about as happy to voluntarily go to a car dealer as they are to get teeth pulled, but the relationship between customer and car dealer is a common one in Japan. “It may sound like a lot, but Japanese customers are used to this kind of service,” Urata, who is also an economics professor at Waseda University in Tokyo, told me. “It is a kind of custom that American dealers aren’t used to.” This hospitality has helped Japanese automakers stay dominant in the Japanese market.

We feel that while cars would evolve as commodities; the only way the OEMs could fight each other would be on delivering exceptional customer experiences & reliable service. The same holds very true for the Indian market as well and that’s what we recommend the OEMs too!

References: The AtlanticWiki

Fuel Split Sales – Passenger Vehicles

In recent years the trend has dramatically shifted from Diesel Cars to Petrol Cars. Reduction in Parity between Petrol & Diesel prices, Lower Cost of a Petrol Car, Easier/Cost Effective Maintenance of Petrol Cars were the primary reasons of the shift. As of today, Petrol Cars contribute >60% of overall Cars Sales. The scenario was way different a few years back where the demand for diesel cars had shot to the roof and the OEMs had to invest heavily in manufacturing of diesel engines. With the government’s proposal of shifting to BS-6 by 2020; it’ll be interesting to see how diesel cars evolve to the challenge. Also due to a lot of policy changes like NGT’s ban on Diesel vehicles over 10 yrs in Delhi-NCR has made the consumers confused to whether to purchase a Diesel Car or not. However, due to the popularity of Compact SUVs, SUVs & MUVs – Diesel Cars are holding the fort and still contribute to ~40% of overall cars sales. Let’s look at the ‘Diesel’ only cars on sale in India right now (which are primarily UVs!) –

  • Ford Endeavour
  • Mahindra’s majority portfolio (Verito/Vibe, Bolero, Nuvosport, Rexton, Xylo, Scorpio, TUV 300 & XUV 500). Only recently M&M launched the Petrol variant of the XUV500
  • Maruti’s Vitara Brezza & Nexa S Cross
  • Renault Lodgy
  • Skoda Kodiaq
  • Tata Sumo, Safari & Hexa
  • VW Tiguan

That’s why the Petrol / Diesel share hasn’t changed much in this year when compared to the same period last year –

While Petrol cars contribution is on the higher side, OEMs such as Toyota, Mahindra, Ford & Skoda have majority contribution from Diesel vehicles in the portfolio. M&M’s dependency on diesel variants remains the highest at 96%!!! No wonder the Indian OEM is concentrating heavily to launch newer electric vehicles & gain the first movers advantage. We have consolidated model wise sales of all brands and bifurcated Petrol/Diesel variant sales for clarity. We have been receiving a lot of requests from our readers on the data and are happy to present the same in this post –

Also note that – While we discuss about the share in Petrol / Diesel cars now; there is going to be a dramatic shift in infusion of Electric Vehicles. All OEMs have aggressive plans to bring Electric Cars depending on the push from Government and supporting policies.

Tata v/s Mahindra – The battle of the ‘Indian’ OEMs

In Nov’17, Tata Motors surpassed M&M as the third biggest OEM as per passenger vehicle sales (source). We have been fascinated by the recent turn of events for both the Indian-origin Passenger Vehicle manufacturers and present you a detailed report on how the OEMs have shaped itself over the years. We also love the competitive spirit these companies present and the efforts they put to improve themselves for the cause is commendable. We still remember – In August 2012 when Mahindra had pipped Tata as third biggest OEM, while addressing the shareholders Mr. Ratan Tata said “I have a great respect for what Mahindra & Mahindra has been able to do. I also have a certain degree of sadness and shame that we have let that happen”. Right on the next day Mr. Anand Mahindra had tweeted “Mr Tata’s comment is extraordinarily humble and generous”. He further added that the M&M group “takes it as a pat on the back from a big brother” and “it inspires us to work harder..”.

Mahindra & Mahindra and Tata Motors are only Indian passenger vehicle manufacturer that flourished well against the onslaught of foreign manufacturers in India. Incidentally both have started their passenger vehicle manufacturing journey with an SUV. Manufacturers such as Hindustan Motors (1954), San (1998), Sipani (1982) and Standard (1950) have gone extinct over time. While those on verge of extinction are – Force Motors (Gurkha), ICML (Rhino MUV – a Toyota Qualis rip-off) and Premiere Auto (Rio-India’s first 4m SUV). Reason – they did not invest their soul in developing contemporary product on their own.

2012 onwards homegrown Indian passenger vehicle manufactures are facing toughest challenge on home turf from the foreign manufacturers. India’s passenger vehicle export is also strongly dominated by foreign manufacturers.

India – Market Share (Volume)

India – Export Share (Volume)

Let’s see how the two Indian Passenger Vehicle Manufacturers fare:

1. TATA MOTORS

Tata Motors is finally reaping the benefits of the seeds sown by erstwhile Chairman Cyrus Mistry and Managing Director (MD) Karl Slym. Year 2013 was really bad for entire automobile industry in India, when we witnessed negative growth, for Tata Motors Passenger Vehicle Business Unit (PVBU), it was worse. Largely because of old product portfolio that started crumbling.

  • Second generation of Indica and Indigo siblings christened as Vista and Manza did not do too well because of uninspiring design and quality issues
  • Looks of Tata Safari Storme became kind of sissy as oppose to Hulk (Tata Safari) it used to be
  • Over ambitiously priced Aria landed in no man’s land
  • Sumo Grande was too quirky design for potential buyers to digest
  • Nano failed to deliver the value at bottom of pyramid

With the new MD at helm in 2012, Tata Motors started journey of trasformation called HorizonNext”, first by giving new lease of life to old products and simultenously developing new generation engine, platform and product. Transformation was not limited to products but has been around all the process, from product development and manufacturing, to sales and after sales customer experience. Efforts started showing results with Zest launch, seen in backdrop of Tata Motors past performance and not industry as a whole. In late 2014, Tata Motors roped in Mayan Pareek, a Maruti Suzuki veteran who knows the industry inside out, to lead the PVBU. Untimely demise of Karl Slym, in 2014,  has created vaccum in the organisational leadership.

New generation products from Tata Motors namely Tiago and Nexon have had got good acceptance. Hexa is doing well in comparison to its predecessor Aria but far behind segment benchmark Toyota Innova, competition will intensify further with launch of new Mahindra MPV in early 2018, which is developed by Mahindra’s US Tech center and bigger Maruti Suzuki Ertiga with in-house developed 1.5L Diesel Engine, later in 2019. Tigor is having weak numbers from beginning, due to underpowered diesel engine in the segment. Same mistake Hyundai made, with launch of Xcent in 2014, one can now see the course correction with updated 1.2L diesel power plant.

Tata Motors is also developing electric powertrain, and recently won Government contract beating Mahindra, to supply 10,000 electric Tigor. Though it would not see the light of day anytime soon in market, as consumer demand is very meek due to high total cost of ownership and unavailability of charging infrastructure. Numbers clearly shows that Tata Motors is slowly and silently phasing out older products like Indica, Indigo and Nano. Tata Motors has long way to go, considering that Maruti Suzuki and Hyundai are firing on all cylinders, wonder what else these duo can do in future with their ambitious India plan.

Tata Motors Product Pipeline

  • 4m Hatchback
  • Tiago Sport – interesting to see whether it will be mere a body kit addition or really it would get retuned engine
  • Executive sedan to take on Honda City
  • Compact SUV – Hyundai Creta rival
  • Replacement for Sumo
  • New Safari based on JLR derived platform and another more premium product to take on Toyota Fortuner
  • Electric – Nano, Tiago, Tigor

2. Mahindra & Mahindra

UV Market Share

The company which has started manufacturing UV in India in 50s and continued to dominate the segment for decades has lost the crown to Maruti Suzuki. It is still banking heavily on old workhorse – Bolero (2001) and Scorpio (2002). Both are champion in rural and semi urban Indian market. Bolero’s sale is largely guided by rural demand which heavily rely on good monsoon (rainfall). This is clearly reflected in sales figure, look at the period of 2014 and 2015 when monsoon was really bad in our country, October 2016 onwards numbers are quite upbeat.

Scorpio in India is more of a symbol of muscle power and mostly owned by politician and contractors. Sometimes I wonder, by what name Mahindra’s marketing team call this buyer segment. My observation is, the mentioned profile of buyers usually wishes to buy Toyota Fortuner (preferably white color!), but those who can’t afford, go for Scorpio, and others settle down for humble and more affordable Bolero.

XUV 500 was great success for Mahindra, but after that, none of the product succeeded in bringing desired volume. This is something Mahindra must be worried about, as sales are getting stagnant and competition is getting more intense.

TUV 300

Was it replacement for Bolero? As it has ladder chassis and RWD, which is deployed by Mahindra for rural and semi urban market offerings. Or intent was to compete against monocoque sub 4m compact SUV like Ford Ecosport? Either way positioning seems to be little confusing. Somehow tank inspired design didn’t sink well with large majority of potential buyers. Well people aspire to fly a jet fighter but how many want to drive a tank? Moreover, ride quality and refinement level is not up to the mark.

KUV 100

Mahindra’s second attempt to enter hatchback segment, with an investment of ₹ 1000 Crore. First was Verito Vibe, a notchback based on Verito (earlier Renault Logan). Since SUV is flavor of the season and very much in DNA of Mahindra, hatchback was styled as mini SUV. But side profile was not pleasing to look at, feels like design team was more inspired by frog, unlike XUV which was inspired by Cheetah. This segment is dominated by petrol engine and buyers are spoilt for choice with refined products since long time. As first attempt to build petrol engine, KUV 100 was having many rough edges. Fuel economy was dismal due to larger capacity AC and ECU mapping, and owners complained of vibrations in higher gear ratios namely 1st, 2nd and reverse. Thus numbers took a dip and Mahindra started course correction, quickly followed by an update, as KUV 100 NXT.

 e2o

Mahindra is second mover in Indian electric passenger vehicle segment by acquiring first mover Reva in 2010. They had a bottoms-up approach, unlike Tesla, which was top-down. Approach is really visionary and commendable, to provide green car but product seems to be half-heartedly made. When I took the test drive, rubber beading around the door had started coming off, rear door opening handle was not working so I have to use the other door to get out, despite battery indicator showing some juice left, it suddenly decided to drain completely and vehicle need to go back to showroom on the back of another vehicle! Safety is questionable, even top end P8 variant priced at ₹ 11.48 Lakhs doesn’t have Airbags, even as option, moreover I am not quite sure how much protection ABS-thermoplastic body panel will provide. Total cost of ownership and several other limitations like range, charging point availability, doesn’t add up well in value equation, in short it is not value for money! Is this the reason why other automakers are waiting and are not quite in haste of launching electric products in India, in order to skip early adoption hiccups and lack of infrastructure? In second half of next decade, electric vehicles will have higher prominence. So, Mahindra seems to be on right path, but it has many, many miles to travel.

Mahindra Product Pipeline

  • MPV developed by Mahindra’s American Tech center, it is benchmarked against Innova, but likely to be positioned between Maruti Ertiga and Toyota Innova. Seems quite promising with new 1.6L diesel engine.
  • Extended TUV300 with bigger engine
  • Monocoque body – 4m SUV
  • SsangYong Rexton – to be positioned above XUV 500
  • SsangYong Tivoli derivative – to take on Hyundai Creta
  • Electric – KUV100, Scorpio, Tivoli, XUV500

Global Ambition

Both the manufacturers are exporting vehicles to our neighboring countries, Africa and South East Asia. All these countries are developing or under-developed ones, but both have ambition to enter in the developed market. Here, there is divergence in choice, whereas TATA is obsessed for the UK, Mahindra’s obsession is for the US market.

Tata

2003                       Tata had an arrangement with the MG Rover of UK to sell rebadged Indica as City Rover, sales   seized when MG Rover Company went bankrupt in 2005

2008                       Tata got lucky with acquisition of Luxury car maker – Jaguar & Land Rover, which is contributing lion’s share to group’s top line and entire bottom line

Mahindra

2006                       Mahindra got into sales arrangement with US based distributor, though it never translated into sales but got into legal trouble because of lawsuit filed by the distributor in the US court

2010                       Mahindra acquired bankrupt Korean SUV manufacturer –SsangYong. SsangYong turnaround is complete now with entire new product range, some of which are jointly developed

2017                       With lawsuit settled Mahindra is finally entering the US market, by establishing a plant in Detroit. Mahindra is banking on R&D facility in the USA for all their new products, the new vehicle will roll out from the plant in 2018 and will be called Roxor.

The Way Forward

Both the manufacturers has lined up new product and engine pipeline to expand and protect the core business and simultaneously working on next generation technology to be deployed in future. Both are leveraging their acquired overseas company and global technology center based in the UK and the USA for future product and technology development. It is interesting to see how well Mahindra is able to leverage famous Italian design house – Pininfarina, which was acquired in 2015.

In coming year’s Automobile industry will soon be in a flux with new, emerging and futuristic technology. With breakthrough in digital technology, cars will become more Connected and in distant future Fully Autonomous. Also with emission norms becoming more and more stringent across the globe, hybridization, electrification and light weighing will gain more prominence. Rate of technology adoption for price sensitive Indian customer will depend on Automobile manufacturer’s ability to make such technology accessible. This opens a new window of opportunity for ambitious companies, but equally, it’s a great threat, if they lose the race of in-house development of cutting edge new technology. From market perspective, drivers of such technology could be needs of the buyer (e.g. remote vehicle management) or could be Government policies and regulation (e.g. Electric cars).

Due to digital layer, which is going to sit on the top of others, many new players will have an easy entry into the automotive domain. For example people get easily carried away with the infotainment system coming in cars over several other specification, thus non-automotive players will start encroaching the space quickly and may make several existing automotive companies irrelevant in coming or distant future.

Homegrown companies need to strengthen their core product line for near future and need to be ready with future technology. Indian buyers are moving towards more and more premium products in every segment, backed by higher ability and willingness to pay. So offering just cheap technology to serve bottom of pyramid may not work in future. Products made for bottom of the pyramid of each segment has done very badly in the past, be it Tata Nano or Toyota Etios.  To be successful in automobile industry, product and pricing need to be spot on, for example look at Renualt Duster, even with slim footprint across India in 2012, it was runaway success, though later it lost the crown.

To corroborate above just consider Tesla. Tesla is successful because people are not buying mere an electric car. They want to buy Tesla because of sleek design, exemplary performance, which is loaded with new age technology, and also happens to be an electric car. Tesla is doing what Apple did to smartphone industry with iPhone – disruption. Those who don’t change with changing technology frontier will end up like Nokia or Blackberry.

As far as aspiration to achieve global footprint is concern, these companies first need to strengthen roots in home ground first. It is pretty much evident from the companies like VW (Germany), Fiat (Italy), Ford-GM-Chrysler (USA), Peugeot- Renault (France), Toyota-Honda-Nissan (Japan), Hyundai-Kia (South Korea), who established themselves in home market first, before setting foot on foreign soil. Also one has to have some uniqueness which is well acknowledged in foreign market and public in general associate brand with, e.g. – quality, engineering, safety, performance,  new age technology, design and such. In western world, Hyundai-Kia were regarded as cheap product manufacturers in 90s, but look where they are today. One of the biggest breakthrough for them was new and stylish design language, when they set-up design center in Europe in early 21st century and hired design chief from VW Group and of course, highly improved product quality. To be globally recognized and respected brand, Indian manufacturers need to reinvent themselves, especially when technology paradigm is shifting.

(The article is written by the Newest Pundit on the team – Rohan Rishi. You can connect with him at emailrohanrishi@gmail.com)

Indian Car Sales Figures – November 2017

Last year November was a tough month for the Auto Industry citing the effects of Demonetization. Hence the Industry grew a healthy 13.7% YoY. However, there was a degrowth of 1.8% in terms of month-on-month comparison. November generally is a lean month for the industry as the festive season (Dussehra/Diwali) would have just ended and the customers would also be anticipating year-end discounts in year end (i.e. December). However, OEMs with huge bookings base would synchronize their demand and increase their dispatches in December – Like Maruti (which grew 14% YoY & 7% MoM). The other OEMs would be struggling as the dealer stocks would have piled up and they would be apprehensive considering the upcoming year end. That’s the reason why you would see a steep Month-on-Month degrowth for OEMs like Hyundai, Honda, Mahindra, Nissan, Renault, Skoda & VW! Many OEMs also plan their annual plant shutdowns in December – hence expect the December numbers to be even lower than November.

Let’s look at the modelwise analysis here:

Highlights –

  • Captur initial numbers are not impressive. We expected the capable SUV to give a tough competition to the likes of Creta, Compass etc. However, it seems to have cannibalized Duster’s sales. Duster registered its lowest ever sales in past 21 months! It signifies tough times ahead for Renault has huge hopes are pinned on Captur to revive its overall sales. As Kwid volumes are diminishing as well, Renault may find it very difficult to sustain its growth/volumes.
  • Tata has dethroned Mahindra from the No.3 slot! However, it has been solely on the basis of 2 Products – Nexon & Tiago. While both the products are a class apart, the dwindling performance of the other models in the portfolio is a matter of huge concern. Any drop in the sales of Tiago/Nexon in coming months will prove detrimental to the Indian MNC.
  • Maruti is the only OEM in the Industry which seems sorted right now – Top 6 selling models in Nov’17 were from Maruti/Nexa. It is practically an impossible feat to achieve. Also commanding a Market Share of over 53% in a market like India is no easy task. With the launch of New Swift nearing by, we expect the OEM to scale even higher volumes in the future.
  • Mahindra is somehow lost right now. The refreshed TUV or the KUV Nxt hasn’t been able to garner enough attention to bring volumes on the table. The average performance of these New Models have put Mahindra under pressure to bring a capable new model launch or else it may permanently lose its No.3 slot.
  • Honda is fighting hard to sustain numbers from its current volume sellers (City & WRV). However, new launches in the respective segments (New Verna & New Ecosport) have made the game all more challenging.
  • The most exciting segment right now is Sedan – Ciaz, City & the New Verna are fighting hard to gain leadership category in the segment. While City & Ciaz have been ruling the turf for quite some time now; Verna has made a stellar start. However, it’ll not be easy to sail through for the Korean OEM. City/iVTEC fanatics will still chose the model & price conscious customers would opt Ciaz; Verna has placed its bet through features. The biggest winner indeed will be the consumer here!

Top 25 selling models of November 2017 –

Top Selling Hatchbacks (entry & mid level) –

Top Selling Premium Hatches –

Top Selling Compact Sedans –

Top Selling Sedans –

Top Selling Compact SUVs –

Top Selling MUVs –

Top Selling SUVs –

November 2017 Car Sales – Snapshot

The Industry Grew 13.7% in Nov’17 when compared to Nov’16. All OEMs showcased a positive YoY growth, apart from Renault & VW. The race for N0.3 & No.4 slot has now gone all more interesting. Finally Tata has dethroned Mahindra from the No.3 position. Even Toyota has ranked a level above than Honda in Nov’17. In terms of new launches, Captur has not given expected volume jump to Renault – Instead the French OEMs degrowth of 18.8% is a concern.