Mahindra THAR — India’s own off road champion!

Launched in the Indian market on October 4, 2010, This compact and mid-size four-wheel drive off-road Jeep CJ-like SUV has always been appreciated for its brilliant off-roading capabilities, rugged and masculine robust body-built and legendary jeep styling. This also has been voted one of the top 10 SUVs available in the Indian market.

Let’s see the volume trend for past 5 years –

Monthly Sales Data (2015-2017)

Thar earned a lot of reputation in its segment and won the hearts of many with its off-roading capabilities but what could be a concern for Mahindra is the stabilizing volumes Month on month and has not been able to give any significant volumes addition. Rather we can term Thar now as a Brand building vehicle in Mahindra’s portfolio.

Year 2013 2014 2015 2016 2017
Average Monthly Sale 637 729 742 510 588

Mahindra Thar which is facing almost No competition in its segment but has the closest competitor in terms of sales volume, despite of New (Thar) vs. outdated design Maruti Suzuki Gypsy which doesn’t offer a diesel engine, power steering but still stands as the closest competitor of Mahindra Thar! In the other hand The Thar has a rugged design, masculine robust body-built, while the Gypsy has conventional styling and outdated design. Still Gypsy brings good numbers to Maruti Suzuki and has been able to give competition to Mahindra Thar in terms of sales volume.

Let’s look at the comparison:

The total volumes of Thar models are about 7,700 units a year and of which 65 per cent comes from DI model. Mahindra expects the incremental sales go come from CRDe version in the near future with changing aspirations of urban people and launch of new Thar with more features. Best of Luck for the off-roader!

Indian Luxury Car Market

Mercedes Benz was the first luxury car maker which has shown confidence in Indian market and set up assembly plant near Pune after Indian Government has allowed foreign auto makers to set up factory through direct investment route in early 90s. First car launched was E-Class, it was W124 series which was then quite dated in global market as W210 series was ready for launch in Germany. Mercedes corrected the course in 1997 by launching W210 Series E-Class, followed by S-Class (2000), C-Class (2001) and M-Class (2002). For almost 10 years Mercedes was the only Luxury car maker in India. By 2004 global economy was very buoyant, India too was riding on the wave, then other luxury car makers decided to set up shop in India and offer expensive toys to emerging wealthy Indian to showcase their new found opulence. Since then only brand which got discontinued was Maybach, a brand re-introduced by Mercedes Benz to compete against Ultra Luxury brands – Rolls Royce and Bentley. This happened because Maybach (2002-2012) disappeared from global market, as it failed to catch imagination of people across the globe, as it doesn’t have heritage to boast of against the prominent competitors. Bugatti, a member of VW family, too has introduced its hyper car Veyron, which claims to be one of the fastest street legal car in the world. It also happened to be most expensive car sold in India till date, if you don’t consider the armored version of conventional models from other luxury car maker. Veyron has been replaced by Chiron globally and is yet to touch Indian shores. Tesla and may be Alfa Romeo are the only brands which can be expected in near future to join the luxury club.

Country of Origin

Britain has most numbers of luxury car brands to offer in India, ironically, none is owned by the British now, which you will see next. Large volume of luxury cars comes from German stable and ultra-sports car arena is dominated by Italians. Safety obsessed Swedish car maker Volvo too is gaining market share as it has recently started assembly operations at Volvo Trucks’ plant near Bangalore. Company from Far East is the most recent entrant.

Family

Whatever car you fancy about with your wealth, VW here has widest range of brands to offer under its umbrella. BMW can have similar spread if it acquires Aston Martin. Some mass market brands like Tata and Geely got lucky with the acquisition of luxury car brand JLR and Volvo respectively.

Social Stratum

Luxury car maker have their own pecking order and fascinatingly have an upper price ceiling too. When you consider other rich man transportation toys like private Jetliner or Yachts, sky is the limit. But when it comes to cars, the most expensive car you can buy from a showroom is either Rolls Royce Phantom or Bentley Mulsanne, even if you have all the wealth of the world. Here we are excluding cars which are expensive in first place by default rather than by design – Hyper Sports cars (primarily focused on high performance, sometime made up of expensive material like carbon fiber, Titanium, and not meant for everyday ride due to stiff suspension setup, seating position and lack of storage space), limited editions (because you cannot order when you wish to), armored vehicle (conventional vehicle becomes expensive), custom made Limos (elongated version of existing cars) and vintage cars (vanity value). Ever thought on these lines or is this has some correlation with Maybach’s failure? If you have an answer, then please write to us. *(Ex-Showroom Price Range in ₹ Crores)

Luxury Car Sales

Till 2006 Mercedes has enjoyed its monopoly in Indian luxury car market. But in last 10 years all the three German (Audi, BMW and Mercedes) luxury car maker got the chance to wear #1 crown, turn by turn. Change in design language, CEO’s aggressiveness, new product launch, especially smaller and more affordable ones, were key reason for shuffling of top deck. Unlike mass market segment where Maruti and Hyundai have had strongly held #1 & #2 rank and seems they would be continuing to do so, Luxury car market will see new leaders with every successful new product or new generation launch.

2017 happens to be the best year for the luxury car market in India where some companies are rejoicing with the sales growth they achieved over preceding year. Almost all are unhappy with September 2017 GST rate revision, which they feel has dampened the growth, and in future it will remain so. Yes tax does have an impact but it has to do more with the wealth and prosperity of the masses for luxury market to grow rapidly. Let us think from a different perspective. Till late 70s India and China had similar GDP size and in today’s date have similar population. Indian luxury car market size is close to 40k units now, but in China, Audi alone, sold more than 5 lakh cars (46k monthly average) in 2017! 3 decades of double digit GDP growth has made Chinese wealthier than Indians. With India’s current GDP growth rate it will take decades to reach such exponential growth in Indian Luxury car market.

Overall market

If you look at the overall passenger car market, luxury car penetration is mere 1%. Here we did a very conservative estimate of revenue and found that the revenue and tax contribution share is relatively high. When you read these figures just keep in mind, that these are very conservative estimates for illustration purpose only, based on certain very broad assumptions. Actual figures based on variant and fuel type of car and revenue from after sales spares can be on higher or lower side (may have wide variation).

Revenue = ∑ [Number of individual model sold x price of lowest variant (excluding indirect tax-GST/VAT/Excise)]

Halo products

There is handful of niche product from non-luxury car makers which falls into price territory of luxury cars. These are all halo products and are not sold in large volumes in India but are meant to showcase the heritage or technological accomplishment of the company, and add to the brand identity. Since all are CBU import, they are quite expensive for the badge they have on front grill.

For example Fiat 500, in late 50s it used to be cheapest car in Italy and made owning personal car a reality for the masses, similar to what Maruti 800 did in India since its launch in 1983. 500 signify the 479 cc engine it used to have then. Now Fiat 500 has assumed an iconic status. It still has the retro styling and borrowed its underpinning from humble Fiat Panda.  In white color it looks more like a lovely pet mouse.

In India, it was first launched in 2008 and was powered by a 1.3L 90 bhp diesel engine and didn’t do well and was eventually discontinued in 2010. It was re-launched in 2015, this time with Abarth badge on front grill and a new name “Abarth 595 Competizione”, with much powerful 1.4L T Jet petrol engine pumping out 160 bhp. 595 signify the original retuned car of 60s which came with a 595cc engine and Abarth is to Fiat is what AMG is to Mercedes Benz, an in-house tuning company. Company claims that it can do 0-100 kmph in less than 8 seconds and clock a top speed over 200 kmph.

Despite the fact that every automotive brand has an upper price ceiling which is psychologically ingrained in the mind of customer, some of these high priced halo products are doing well.

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

Luxury Car Sales for last 10 years!

Yes, we have been able to collate the data for the last 10 years (2008-2017)! The Luxury Car Industry has grown >5 times in the last 10 years in the Indian subcontinent. Though the overall annual volumes is less in the country, the continuous growth in the segment has attracted many Luxury carmakers to make their presence here. To highlight the significance of Indian Luxury Automotive segment – India is one of the first few markets in the world where the Lamborghini Urus is being launched. Even with a ticket price of Rs.3 crores (Ex-showroom, Delhi), company claims that they have exhausted almost all the Lamborghini Urus SUVs allotted for India, for the year 2018!

In the consolidated Sales of past 10 years, Mercedes Benz take the Top slot with the sales of 88,260 units. BMW stands second with sales of 70,209 units. Audi within a smaller span came close to BMW and sold 67,887 units. It is important to note that while Mercedes is present in the country since more than 20 years, BMW and Audi have completed just half the tenure of Mercedes! BMW’s rise was phenomenal – It was able to dethrone Mercedes as the No.1 luxury OEM, just within 3 years of its presence in India. Audi’s rise has been similar – Though it was founded in 2007, it jumped as the No.1 Luxury Car maker  by 2013 and toppled both BMW & Mercedes. However, the spur of new launches in 2015 drove Mercedes Benz back to Numero Uno position! In 2017, Mercedes Benz commanded a market share of over 39% and is going strong year on year. It also achieved its all time highest sales volume of 15,300 units in 2017!

The ranking table has been extremely volatile over years and the same is depicted in the above table. Also attached here is the latest Ad from Mercedes Benz highlighting the No.1 Luxury OEM for 3 years in a row –

An ode to Tata Indica – 20 years of Indi’genious’ car!

Yeah, Tata Indica was India’s home grown first indigenous (originating or occurring naturally in a particular place; native) car! It was showcased in 1998’s auto expo and shipment to dealers started from Feb’99. It has sold an impressive ~15 Lakh cars in 226 months and is currently in the end of its life. We saw a post on 20th Birthday of the legendary vehicle today, and hence this article! Let’s see some interesting stats on the brand –

  • Within a week of its unveiling, Tata Motors received 115,000 bookings! Within two years, the Indica had become the number-one car in its segment.
  • Introduced with the caption “More car per car,” the ad campaign focused on roomy interiors and affordability. And yes, it was one of the most impressive automotive ad campaigns of all time.

  • Indica was the first Tata to have a monocoque chassis! And the other firsts from Tata Motors were – first car to have a “body in white”, first car to be designed keeping aerodynamics in mind, first car with a transversely mounted front engine, front wheel drive layout.
  • The Indica offered options like air conditioning and electric windows, which were previously restricted to upmarket imported cars in India!
  • Indica was also exported to European markets from 2003. It was rather badged as a MG Rover CityRover!

  • It’s highest sales in a month was 15,283 units (Mar’2007)!
  • Tata Indica has sold 14,69,038 units till date and has been the best selling car by an ‘Indian OEM’!
  • Indica established Tata Motors as a forerunner in the Indian OEM’s race. Other OEMs (like M&M) followed the suit. Indica also helped Tata Motors launch other models (Indigo, Indigo CS) which elevated Tata Motors race to No.3 OEM in Indian market.
  • A glance at Indica’s sales over years –

Interesting Fact – 1998 Auto Expo was iconic in terms of the cars which were showcased that year (Tata Indica, Hyundai Santro, Honda City, Ford Fiesta etc)!

Launch Ad –

Indica V2 TVC –

15 Best Selling Cars in the World!

Introduction On Best Selling Cars across the globe

If you are a passionate lover of cars and would like to know more about it, then you will certainly the next few lines interesting and informative. This is because we will be talking about fifteen best selling cars. While there could be many such articles on the internet there are is something unique about this article. The cars which we are listing below have been chosen with quite a bit of research. Customer perception, review of critics and other such factors have been taken into account only after which the list has been listed. It includes a wide variety of models of cars across different manufacturers and this certainly will appeal to a large section of car lovers who are looking at variety rather than just concentrating on a few cars.

15-Best-Selling-Cars-in-the-World

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

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.