Bajaj Auto launches the 2019 Dominar 400

The new Dominar 400 dons a more powerful DOHC engine and up-side down forks

The new Dominar brings in a lot of  enhancements with more powerful engine, advanced technological features and a distinctive throaty exhaust note. The new Dominar now comes with a liquid cooled 373.3cc DOHC engine that delivers significantly higher 40 PS power. This upgrade also features 43 mm upside down (USD) forks which provides a  muscular look along with better handling & comfort. The new twin barrel exhaust produces throaty exhaust note with heavy bass that augments the sports tourer feel.

The 2019 Dominar 400 is packed with a host of additional offerings, like bungee straps tucked under the seat, redesigned secondary display showing time, gear position, trip information and space craft inspired tank pad decals.

Commenting on the Dominar 2019 upgrade, Mr. Sarang Kanade, President – Motorcycles, Bajaj Auto Ltd said, “Dominar 400 has been able to create a strong following for itself and has become the preferred choice for city riders and long distance tourers, alike. Customers have pushed the bike into extreme long distance and challenging geographies with aplomb, which inspired us to strengthen the sports tourer credentials in the new Dominar.”

The new Dominar 2019 is now available across all Bajaj Auto dealerships in dual channel ABS variant with Aurora Green and Vine Black color options at Rs. 1,73,870/- ex showroom Delhi.



Technical Specifications –

Ertiga registered its all time highest sale in Mar’19!

Ertiga sold >8k units in a month (Mar’19) for the first since its launch!

Since the Ertiga was launched in March 2012; never has the model crossed 8k units in the past 84 months! However; the New Ertiga has given a fresh lease of life for the model and catapulted its sale to an all time high. This volume comes at a time where the segment was ignored and had a fresh competition in the name of Mahindra Marazzo. Maruti proves that it is magically capable of extracting volumes from a segment which was otherwise losing steam.



Let us have a look at the performance of the offerings in the MPV segment –

  • The MPV segment grew an impressive 12% YoY and registered a sale of 27,918 units in Mar’19. The segment was backed by strong numbers from the segment leader Ertiga and was supported by Toyota’s Innova & Mahindra’s Marazzo.
  • Renault today confirmed its intent to launch its next offering in this segment and has named it ‘TRIBER’. It shall be a critical launch for the French Automaker; as it has already burnt its fingers with Lodgy. Renault needs to both position and price the vehicle really well to make an impact in the segment. Also the product has to stand against the mighty Ertiga & Marazzo!
  • Xylo/Hexa/GO/Sumo/Lodgy – less said, the better.

Ertiga & Marazzo have just raised the hopes for the overall segment and is showing that there is still juice left here.

Ciaz – Best selling C-segment Sedan of Mar’19!

C-segment sedan space is primarily contested by 3 models – Ciaz, City & Verna. While City is the longest selling nameplate in the list; Ciaz & Verna have been giving stiff competition to the legend. In Mar’19; Ciaz sold 3,672 units and emerged as the segment’s bestseller. The segment had always been a tough nut to crack and even the likes of Toyota have miserably failed in their attempt.



  • The segment has been slowly shrinking and  not a single model in the entire list posted a positive YoY growth in Mar’19!
  • Though Ciaz topped the charts; it degrew a hefty -15% in Mar’19 v/s Mar’18. The C-segment offering from Nexa has offlate facing pressure to maintain volumes; but the inconsistency in the segment is making things difficult.
  • City still continues to be the darling of the segment and registered a sale of 3,432 units. However; the slowdown in the segment pushed City to post degrowth of -27% YoY.

The numbers clearly project why the new OEM entrants are shying away to launch models in this segment. It is now a risky affair to invest any amount of time/money to bring models here.

Luxury Car Market Potential in India

Background:

Global performance of Luxury Car has been on a high in 2018, but in India last year was a challenging one. The Retail Volumes of the major luxury car manufacturers for the year 2018 is as shown (Source: Autocar) –

Developed Markets: Luxury Cars, Volumes & Contribution into Total Vehicle Sales:  

In developed markets, Luxury vehicles typically account for around 5-6 percent of the overall market.

For eg: In USA, True Blue Luxury Brands (Mercedes, BMW, Tesla, Volvo, Land rover, Porsche, Mini, Jaguar) – 11.13 lakh cars sold out of the Total Vehicle Sales 1.72 crores – 6.37%. Even the premium cars from Ford, Subaru, Honda, Toyota & Kia stable included in the overall calculation – the approximate penetration should be looked at 8%.

India & its potential:

True Blue Luxury vehicle Sales in India in 2018 stood at 40,688 nos.; while the Total Vehicle Sales should be approximately at 34.5 lakh units (yet to be declared by SIAM). i.e, a Luxury vehicle penetration of 1.2%. Even today the macroeconomic forces, Elections is playing on Customers Minds is slowing down demand. We are hopeful that the Overall Market alongside with the Luxury Car grows atleast 15% post elections.



Feedbacks from CEO’s – Luxury car Market:

“We are satisfied with our sales performance in 2018 despite facing strong macroeconomic headwinds in H2 (second half), resulting in low consumer sentiment that posed significant sales challenges. We, however, made a strong comeback in the Q4 period (October-December) and were able to achieve a year-on-year growth,” said Martin Schwenk, MD and CEO, Mercedes-Benz India.

“2018 was surely a challenging one for the auto industry in India, especially in the second half of the year. The luxury segment was under pressure owing to financial market development, changing customer sentiment and changes in tax policies. We faced some unforeseen business challenges during the year, which led to reduced deliveries for 2018,” said Rahil Ansari, Head, Audi India.

“The auto industry faced strong headwinds in 2018, especially in the second half with tight liquidity conditions, increased upfront insurance costs and increased lending rates. Despite that, the growth of Jaguar Land Rover in India has been very encouraging,” said Rohit Suri, president and MD, JLR India.

OUTLOOK FOR 2019:

Cautiously Optimistic is the Word for 2019…

4742 units of XUV300 set the roads on fire in Mar’19!

Mahindra launched the XUV300 in Feb’19 and a lot is riding on this model to cement M&M as the third biggest OEM in the Indian market for FY20 (Apr’19-Mar’20). M&M sold an impressive 4,484 units in the first month of the launch itself and overtook the likes of Ford’s Ecosport & Honda’s WRV. It was able to repeat the feat in Mar’19 and sold a staggering 4,742 nos which was much higher than the sales of Ecosport (4,241 nos) & WRV (2,552 nos). However; a spurt is seen in Nexon’s sales and the model has now continuously sold >5k units for three months in a row! Post the announcement of 5-star safety rating in the NCAP tests; Nexon’s acceptability has shot up significantly and the same is seen in its sales volumes.



We have compiled the sales figures of the Compact SUVs (<4 meters) and is as shown –

  • The overall segment grew by 6% YoY and was supported by additional volumes from XUV300 this year.
  • Nexon has shown an impressive sales growth and grew 27% YoY which was highest in the segment! Looks like people are now considering ‘Kitni Safe Hai’ seriously.
  • Brezza continues its success run and sold over 14k units. Such kind of volumes with only Diesel option is unbelievable and only Maruti can do it!
  • WRV is slowly being pushed down the table and it recorded a de-growth of -42% YoY. Similar fate being experienced by the TUV300 too and the model is just not able to compete with its sibling XUV300.

With Hyundai launching the Venue in May’19; the competition is going to be even more intense and cut throat. We expect the overall segment to grow double digit this year and give the required volume boost to its respective OEMs.

Harrier overtakes Compass & XUV500 sales in Mar’19!

Warrior Harrier!

Harrier was the most awaited and ambitious launch from the Tata’s stable. This shall be the costliest car to come out of the Tata’s showroom and the Indian MNC had created quite a buzz before the launch. Entering into a segment which was dominated by the likes of XUV500 & Compass at the higher range and Creta at the lower range was not an easy task. However; Harrier started off slow in the first month and registered a sale of 1,449 units in Feb’19. Tata seems to have scaled up production and was able to dispatch 2,492 units of Harrier in Mar’19. It was >500 units than the rival XUV500 & almost 1000 nos more than the Jeep’s Compass.



We have compiled the sales figures of the >4m SUVs (barring Premium/Luxury SUVs) and is as shown –

  • Creta as usual topped the chart and sold ~11.5k units. The model volumes grew a healthy 14% YoY and proved the potential of the segment.
  • Scorpio did farely well and could sell ~5.5k units. We expect that the election season could have given some kind of boost to Scorpio sales in the subcontinent.
  • Harrier jumps to the third spot and registered a sale of ~2.5k units. It makes a strong entry into the ranking table and would be interesting to see how Tata could sustain the demand and synchronize its production accordingly.
  • Kicks shows a lackluster entry and could post a sale of just 701 units. The lifeline for Nissan hasn’t worked as expected and projects a tough time ahead for the brand.

Do note that the overall segment could grow a mere 4% in Mar’19 v/s Mar’18. This is going to be a toughly contested segment with the New OEMs planning to launch their offering here. Interesting to see that Kia’s SP2i concept, MG’s Hector & even Citroen’s Aircross will be placed against the models in this segment. A lot of money and hopes are pinned here!

March 2019 Car Sales – Snapshot

The Passenger Car Sales degrew -2.8% in Mar’19 v/s Mar’18. Due to muted demand and weak consumer sentiment; the Industry is under consistent pressure and last few months have been very challenging. All OEMs are now gearing up to meet the upcoming BS-6 regulations and CAFE (Corporate Average Fuel Economy) norms. The slowdown is expected to continue this Financial Year and Apr’19 – May’19 is going to be even more challenging citing the upcoming general elections.



Let’s see how the OEMs fared in Mar’19 –

  • Apart from Mahindra, Honda & Toyota; all OEMs saw a YoY decline in the sales. The biggest decline was seen for Nissan+Datsun which registered the drop of -41% YoY!
  • Maruti Suzuki reported a flat percent increase in its domestic sales at 1,18,515 units in Mar’19 v/s 1,18,842 cars sold in Mar’18.
  • Nexa seems to be struggling while it reported a -6% degrowth in YoY sales. Even with the launch of New Baleno; Nexa wasn’t able to recover the volumes and post a positive growth.
  • Hyundai degrew -8% in Mar’19 v/s the same period last year. Even post Santro launch; Hyundai hasn’t gained significant numbers.




How the Market Shares figures for Mar’19 –

Civic Attack!

Honda’s global bestseller Civic makes a stellar comeback in the Indian market. While the marque skipped a generation and was launched at a time where the segment was shrinking and SUV’s were brutally taking over. It was a noteworthy risk by Honda to launch a model at this phase – However; the risk looks to be paid off! The model garnered over 2400 bookings in less than 2 months and is off to a great start. What we understand is that the majority of the bookings are for Civic Petrol (available only in Automatic Avatar) and constitutes to >85% of overall bookings for the model. Prices for the tenth-generation Honda Civic start at Rs 17.69 lakh for the petrol and Rs 20.49 lakh for the diesel. The new Civic is precisely available in three petrol and two diesel variants.



Let’s have a look at the Mar’19 sales figures for the models in D-segment:

  • Honda sold a phenomenal 2,291 units of Civic in Mar’19! The model contributed to 80% of the segment volumes in the first month itself. Thanks to the Civic; the segment volumes jumped a stellar 7.2 times in Mar’19 v/s Feb’19!
  • All other models combined (Altis+Octavia+Elantra) could sell only 580 nos in Mar’19 which is almost 1/4th of Civic’s volumes!
  • Point to note is that the volumes of Altis/Octavia/Elantra even post Civic launch which signifies the expansion of the segment and customer’s renewed interest in the same as well.

While this is just the first month post the Civic has been launched; it would be an arduous task for Honda to sustain the volumes and continue the momentum in the segment.

Year 2018 Review – Figures in value terms (₹)

Highest revenue generating cars (Estimate)

  • Super successful Maruti Dzire, alone, roughly makes revenue equivalent to whole of Toyota in India
  • Still, Toyota is making big bucks with Innova and Fortuner, which also make up for the goof-up like Etios and Yaris
  • Looking at Ford Ecosport and Tata Nexon vs Honda City and Maruti Ciaz – it certainly makes more sense to put product development money behind crossover/SUV, rather than full size sedan




Estimated revenue generated by each product (Crore ₹)





2018 Average Price Tag (Estimate) – Signifies the positioning of OEM in Indian market

**Average Ex-Showroom price takes variation of fuel and variant mix into account

Methodology

Snippets

  • Average price tag of cars sold in India is around 7.7 Lakh ₹
  • Tata with rich product pipeline is certainly going to see improvement in coming years
  • Nissan-Renault-Datsun has slipped in lower price band which is certainly not going to help them much in the future
  • Honda once had premium brand image in India, has now significantly lost much of its sheen because of high volume-low price driven growth strategy and over usage of Brio platform extension
  • One product wonder company – Ford, was helped by Ecosport and Endeavour to earn better overall price tag, ironically, also due to non-performance of cars with lesser price tag (Figo & Aspire)
  • Mahindra – XUV 500 and Scorpio has pulled the tag upwards of 10 lakh ₹ mark, with known future product pipeline they will remain there
  • With high value products, Toyota certainly has an edge over others
  • Skoda and Jeep’s high value products certainly give them good foothold in Indian market, even with lower volume




  • Indian buyers are certainly moving up in premium price ladder, gradually
  • Investment in future products to serve bottom of pyramid may prove to be futile (best example Tata Nano), especially considering tightening emission and safety norms in the country




Dealer Value Throughput from New Car Sales (Crore ₹ – Based on average ex-showroom price)

Methodology

We tried here to understand sustainability of current OEM dealerships based on value throughput. These figures just illustrate a very high level view. Interpretation of these figures needs some understanding as below.

  • These figures just show estimated arithmetic average at OEM level
  • Actual dealership revenue will be in range of 2%-7% of these figures, based on margin offered by the OEM on different product(s), and type of retail format
  • Based on volume throughput, revenue and profitability of dealership may show large variation from these figures
  • Dealership location (Urban/Semi-Urban/Rural) is key determinant of actual volume throughput
  • Dealership located in high economic activity zone will have higher throughput despite the tier rating of the city/town or political status (Capital of State), for illustration, towns in Punjab like – Amritsar, Ludhiana etc will have higher consumption than the capital cities like Ranchi, Bhubaneswar etc.




Snippets

  • Toyota dealers certainly make most money due to high value products sold in large volume
  • With rich product pipeline Tata’s dealership financial condition may improve over time
  • Despite low volume, high value of products still make financial sense for Jeep and Skoda’s dealer
  • Nissan-Renault alliance’s dealership certainly looks in big financial trouble
  • Moreover, their existing car park (cars sold earlier) is not big enough for sustenance through after sales service business
  • And it is a vicious circle : Low realization at dealership >  Poor service quality > Unhappy customers >  Bad word of mouth > Reluctant new buyers > Low sales > Repeat
  • To break this cycle, at some point, OEM need to infuse capital in dealership for sustenance till new competitive products comes in
  • Though it is too early to judge Kicks market performance, but given its price and competitors it faces, it is certainly not going to bring much respite for the dealers
  • They certainly need to bring in next gen Micra and large SUV like XTrail or Pathfinder, quickly
  • Else they will end up like Chevrolet, with export only business in India
  • Datsun as a low cost- low priced product line strategy certainly looks like flawed one
  • Somebody at the group certainly misread the Indian market (Toyota did the same with Etios)
  • With Indian customer moving up the premium price ladder gradually, that is apparent in the second graph from the beginning of article, so, Datsun brand as a whole may just meet the fate of Tata Nano
  • Wondering how they could afford their new Brand ambassador Aamir Khan! (Celebrity endorsement cost is nearly 10% of Datsun’s 2018 revenue)

(The article is written by Rohan Rishi. You can connect with him at emailrohanrishi@gmail.com)