2018 YTD Passenger Car Industry Analysis

2017 vs 2018 (January to September YTD)

With three quarters of the year behind us and two big festive season to go before the year ends, situation has become little challenging for auto manufacturers, due to rise in input costs and fuel prices. As both these factors are impacting the consumer sentiments at large. Let us see how passenger car market has performed so far in 2018 compared to same period (January-September) in 2017.

  • Industry grew by 6.9% so far over 2017
  • Maruti is growing much faster than the industry and yet doesn’t seems to be complacent in any way with product and technology onslaught
  • Hyundai has to wait for Santro’s launch to match industry’s growth rate by the year end
  • Tata has come very close to secure 3rd position, ceded to Mahindra in 2012
  • Despite good numbers from Amaze, Honda is yet reach last year’s numbers, largely due to City and Jazz’s numbers, feeling intense competition in respective segments
  • Ford’s growth is propped by Ecosport, no surprise why Ford in India is called one product wonder company
  • Similarly, Toyota’s growth is coming from mighty MUV ‘Innova’, rest of the story is not so hunky-dory
  • Despite facelift Kwid available in market, Renault is deep in red

Car Size

Car Size

  • Small cars (<4m) are major growth driver of the industry in the current year largely attributed to Maruti’s products
  • Mid-sized segment growth is pulled down by shrinking sedan segment
  • Large car growth is led by Toyota Innova, rest all are stagnant or declining

Body Type

  • India too caught the global SUV fever and growth of SUV/Crossover is no surprise
  • Sluggish growth rate of hatchback is largely attributed to shrinking base of small hatchbacks like Alto or Kwid
  • Large hatchbacks are doing pretty well
  • Mahindra Marazzo and upcoming Maruti Ertiga may bring MUV category back in black till year end

Sedan Segment

Though sedan segment appears to be growing, there is more than meets the eye. So we tried to peel the layers of onion to see how market demand shift towards SUV has impacted sedan segment’s growth.

Except for sub 4m sedan, every other sedan segment is in decline mode. Growth of sub 4m is led by only Maruti Dzire followed by recently launched Honda Amaze. Decline in premium sedan segment has been covered in one of our earlier article. The latest victim of compact SUV onslaught is mid-size sedan segment.

Since segment is de-growing YoY by 5.4%, 3rd generation Hyundai Verna launched in late 2017 has eaten into the Honda City and Maruti Ciaz’s pie. Despite the latter’s inherent strength, they were left with no choice other than to cede market share. Right now only relief for them is suicidal pricing of Toyota Yaris.

Toyota’s highly ambitious and miscalculated step has backfired badly. Four months since launch sales tapered down, so, Toyota has started offering discounts, that too in festive season. Moreover, Yaris doesn’t feel any special or premium over segment benchmark for two decades – Honda City, and at that price point Hyundai Creta looks far more lucrative too.

For manufactures, choice is simple now – start investing money, time and effort in SUV, where future market demand lies, instead of sedan! It seems, Ford’s global strategy to kill sedan by 2022, a more prudent decision, because at the end of the day, marketer’s job is to meet the needs of buyers, functional and emotional.

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

3 thoughts to “2018 YTD Passenger Car Industry Analysis”

  1. If you look deeper on the growth of SUVs and shrinking sedans/compact cars, customers prefer stronger, reliable and practical vehicles, that are value for money (total cost of ownership) and gives them the sense of safety, security, good ground clearance and all round visibility during driving. Therefore they are cross-shopping across body types. Middle-class is extending budget to go after stronger vehicles and avoiding ultra-compact or vehicles that face excessive dents even with a touch of feather, and even avoiding brands that are too expensive upfront, assuming they will keep the car for 5-7 years on average before considering replacement / upgrade

    1. In the car themed entertainment show – The Grand Tour (Season-2, Episode-10) on Amazon Prime, host Jeremy Clarkson has made a very good analogy about SUV “If you are in a hatchback or a saloon, you see an SUV much larger coming towards you. You think, if we have an accident, I am going to come of worse. So I better have one too! They are like nuclear weapon, once one person got one, everyone wants to have one”. Just like safety arms race.

      Additionally, people have innate desire to own a car which just has to be bigger than their neighbor’s.

  2. YTD growth rate till July was 10.6% and that has come down to 6.9%, that’s 3.7%! That doesn’t look so good.

    Weakening rupee and rising input cost is impacting all the manufacturers including Indian companies like Tata and Mahindra, as they too have direct and indirect forex cost exposure. This impact will push them to raise car prices and rising retail fuel prices will eventually prove to be double whammy for all the manufacturers.

    Let us see if new launches like Santro, Marazzo or Ertiga will bring some growth number for industry or just burn out their respective competitor.

    This we will cover after the year ends.

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