Global Commercial Vehicle Market (2007-2017)

After 2007 sub-prime crisis, demand for CV plunged and de-growth continued till 2009. During tough financial times several Governments had put monetary and fiscal stimulus in place (Keynesian Economic Theory) and market demand regained, and by 2011 it was again back to 2007 level. 2011 onwards global demand had gained traction and is growing at steady pace now.

The USA is by far the biggest CV market. Global CV growth is always in line with the US market growth trajectory, thanks to American’s love for pick-up (Light commercial vehicles).

However, global growth hasn’t been homogenous, as several countries have gone through strained financial condition in last 10 years, coupled with tepid demand owing to inherent cyclical nature of CV industry. India too is case in point, by 2011 India reached #4 rank but then slipped to #6, followed by shallow recovery.

Top 30 Country-Market of 2017

Data Source : OICA CV sales data (Commercial vehicles include light commercial vehicles, heavy trucks, coaches and buses)
  • The USA has lion’s share in the global market
  • Top 30 countries account for 95% of global CV sales
  • Out of top 30 countries, almost 11 have witnessed ‘0’ or negative growth in last 10 years due to stagnation or declining economic activities in respective countries

High Growth Region (2007-2017)

  • These are the countries having substantial base year market size and sustained growth rate of 5% and above over a decade
  • These are the key markets and CV OEM need to watch out these countries as their future growth engine
  • Economic recovery in Brazil & Russia, which suffered economic recession in recent past, now have high chances of better growth in coming years as oil and commodity prices have started hardening

Declining Major Markets (2007-2017)

  • Crude Oil price crash of 2015 was a major setback for Russia and Saudi Arabia and the reason for declining CV market
  • Spanish and Italian market witnessed massive decline at the height of European Sovereign Debt crisis around the year 2012, since then both are on recovery path
  • In last 4 years Japanese market growth rate has been almost flat, it is more like a saturated market now


  • Canada and the USA are growing at healthy rate in line with their economic growth trajectory
  • After 2010, Asian market growth has remained largely flat
  • Overall European market has contracted in last decade

North America


Central & South America



The Past & Future of Badge Engineering!

First of all what’s Badge Engineering/Cross Badging (Source:Wiki)- 

Badge engineering, sometimes called Cross Badging, is the practice of applying a different badge or trademark (brand, logo or manufacturer’s name/make/marque) to an existing product (e.g., an automobile) and subsequently marketing the variant as a distinct product. Due to the high cost of designing and engineering a new model or establishing a brand (which may take many years to gain acceptance), economies of scale make it less expensive to rebadge a product once or multiple times than to create different models.

The term badge engineering is an intentionally ironic misnomer, in that little or no actual engineering takes place.

Cross Badging : Season 2.0

Toyota and Suzuki joined hands in February 2017 for long term partnership to collaborate in the field of upcoming hybrid and electric drivetrain, autonomous vehicle and slew of other futuristic technological areas to remain relevant in future and save cost in future product and technology development. In November 2017 press statement they have outlined the long term plan to introduce EV in India by 2020. Further in March 2018, for India they had short and medium term plan and decided to sell cross badged products in India and put up a compete and collaborate arrangement in place. Initially they have planned to supply vehicle where they don’t have direct presence. So Toyota will provide Corolla (Premium Sedan) to Maruti – as new flagship model, since Maruti has long unfulfilled ambition to go premium. In turn, Maruti will provide its best-selling sub 4m Brezza (C-SUV) & Baleno (Hatchback) to add to Toyota’s bottom end portfolio, and utilize its showroom space.

Cross badging or Badge Re-engineering concept in India is quite old. Hindustan Motor’s Ambassador (50s) was cross badged Morris Oxford (UK), popular Premier Padmini (60s) was actually cross badged Fiat 1100 (Italy). And then there are many like Chevrolet (Subaru, Daewoo, Isuzu, SAIC), Reanult (Dacia) et al.

But the current cross badging concept in India is little different. As in case of Ambassador or Padmini, only Indian badged product were on sale and not the foreign badge simultaneously in Indian market. This concept of cross badging and sale of same vehicle under two different brands in Indian market at the same time, targeting same consumer segment, was introduced by VW with group company – Skoda (2011), and later followed by Renault (2012) with alliance partner Nissan. Their products were identical except for the front facial which usually remains in line with the family looks of the respective brand. Incidentally both were late to Indian car market. Question is, has this strategy really worked as envisaged by the manufacturers. Let us see through the sales number analysis.

Platform sharing within group companies is very common but cross badged products just have cosmetic differentiation, more of a gimmick. Product cannibalization is obvious and is understood beforehand, as real objective is to achieve higher incremental sales, expand product portfolio at lowest possible cost and keep the showrooms busy with some real business.


  • Quick to Market : New product development from scratch takes around 3 years, to move from drawing board to finished product at the showroom and new product on older or existing platform too takes at least a year. But cross badged products gets ready in just couple of months, which translate into better return on investment (RoI) at low risk, if product succeeds.
  • Low Product Development Cost : In some of the existing cases it was as low as ₹ 15 Crore as oppose to platform sharing which cost minimum ₹ 150 Crore. Badge reengineering involves minor tweaks in design and minor retooling at the factory and vendor level. So it calls for small incremental investment and improves RoI.


Since Product differentiation is very low with no additional functional or emotional benefit for consumer, other than badge appeal; pricing, positioning and selling becomes a tricky task, as potential customer are well informed these days.

Cross Badging Season 1.0 :  Product Performance

VW Vento + Skoda Rapid

  • In short run it worked a little, slightly better incremental sales was achieved with acceptable level of cannibalization, when diesel engines were in high demand.
  • When Honda City came back with a diesel engine in 2014, it decimated competitors except for the new kid – Ciaz which has had a Value for money tag.
  • Within 2 years together, individual and combined market share shrink to half.
  • Together Rapid+Vento had better ranking but still never able to reach #1.
  • After 2017 Skoda Rapid update, it totally cannibalized VW Vento.

Nissan Sunny + Renault Scala

  • Sunny’s market share dropped to half after Scala’s launch.

Scala demanded price premium over the Sunny for not so familiar Renault logo then and it lost the plot in first year itself and later got discontinued due to poor sales.

Renault Duster + Nissan Terrano

  • Duster with all the bulges around looks like a mini Hippo but Terrano was more chiseled and give an impression of mini Rhino and for that it demands a price premium of ₹ 70k+.
  • Terrano though filled the Nissan’s product portfolio gap but was never successful in bringing volumes due to its pricing.
  • First mover advantage faded quickly with the arrival of formidable Hyundai Creta.
  • Duster is still able to hold but Terrano is almost on verge of discontinuation.

Nissan Micra + Renault Pulse

  • In very short run it worked very little as incremental sales was achieved but later very few were ready to pay ₹ 15k extra for Renault’s badge slapped on Micra.
  • Micra’s sales dropped badly after the launch of Pulse.

Platform Sharing

Products sold under different brands but made on same platform having same body shape either to serve same consumer segment at similar price point or to cater to needs of different consumer segment at different price point has actually produced much better results. Though it calls for higher investment but it helps in augmenting market much better.


Except for external design, logo and sales channel, products have had very little differentiation, in short no additional functional or emotional benefit for consumer except for the badge, in case any potential customer has some brand preference or loyalty. Eventually cheaper one did better or as in some cases, rather the one which actually survived.

But VW and Renault were new entrant then and products were relatively new and neither one enjoyed much of brand awareness in Indian market. Toyota-Maruti case becomes more interesting because both are deeply entrenched brand in their own right and product intended to be shared across the brands are best seller in their respective category. Toyota badge will naturally command price premium, so will they be able to sell already successful product at much higher price with mere cosmetic changes and get away with what newbies were not able to do? Also, will Maruti badge do justice to global best seller Corolla or end up eroding the brand image of Corolla, akin to what Zen Estilo did to brand Zen? Moreover rebadged Corolla will be real test for Maruti’s sales channel NEXA. After sales service of both the companies are benchmark in the industry, Maruti for its reach and Toyota for its standards. So providing service for cross badged product could be a challenge. Just imagine that the Toyota has to train service staff to manage the Fiat’s diesel engine too, unless they decide to offer only petrol or hybrid engine.

Well, history is littered with more of unsuccessful stories. So, will Maruti Corolla (Could be called Kizashi?) and Toyota Brezza & Toyota Baleno going to change that? Only time will tell, when products land in real battle ground. Because many a times customer or consumer do not behave in the same way as they state during market research process before the launch and that’s the biggest challenge for marketers and product planners.

Kia needs to be careful with the positioning of their products alongside the parent Hyundai in Indian market. Although their products are highly differentiated in terms of styling in the international market and with no baggage in India, Kia could use this as an opportunity to gain premium positioning in Indian market and fill the gap where Hyundai is not very successful i.e above ₹ 15 Lakh segment.

Different School of Thought

Departing from cross badging concept, Maruti in past has tried little different approach of launching two slightly different product at similar price point. Largely based on Steve Jobs (former Apple CEO) famous saying – “If you don’t cannibalize yourself, someone else will”. Maruti’s idea was to offer variety when potential buyer visits a Maruti showroom, so that there could be a better chance people leave the showroom with a Maruti product, and keep Maruti’s sales register ringing.

Wagon R – Zen Estilo


Zen Estilo was first move by Maruti to cannibalize its own product Wagon R by launching it at similar price point with slightly different body styling. Strikingly it was also available in pink color, never seen before in the industry.

Instead of cannibalizing Wagon R, Estilo was able to bring incremental sales and due to platform sharing, unlike old Zen, it was able to achieve cost synergy as well and offer better ROI due to incremental investment on platform. But Zen Estilo was never able to live up to the original jelly bean shaped Zen, in terms of sales. In Spanish Estilo means style, but it was more of a stylish Wagon R, (some sort of! rather than boxy wagon R), but never ‘stylish’ Zen. Original Zen was launched by Maruti in 1993, had first all-aluminum engine block and in those days it was sometimes regarded as first hot hatch.

Some feels that Zen Estilo, till its existence (2013), has had eroded the robust Zen Brand to certain extent, build over a decade. But then, product brand name can be resurrected based on product’s strength and the best example is Baleno. Currently the name plate is used by a very successful hatchback; you may relate to if you do remember the old Baleno name plate was used by not so successful sedan, launched by Maruti in 1999.

2014 onwards Wagon R was joined by similarly priced, Maruti’s guinea pig – Celerio. Since launch, Maruti has kept on experimenting with Celerio, for example – it was first to have AMT technology, now discontinued Maruti’s in-house developed 800cc two-cylinder diesel engine, and also the cross-gimmick called Celerio X. But Celerio doesn’t share platform with the Wagon R, perhaps upcoming next gen Wagon R might.


Ritz was launched in the year 2009 and the approach was extension of Zen Estilo-Wagon R experiment and had more meat. Ritz and Swift were meant to cater two different segments of consumer. It seems Maruti has properly segmented the market based on consumer need and tailored Ritz to address a different segment. To elaborate, Swift was aimed at segment of single-young buyer looking for lively performance (advertisement slogan – “You’re The Fuel”), but Swift had a major shortcoming – small and not very practical boot and claustrophobic rear seat. Practicality of boot and rear seat space was key concern area for young buyers having family and their need was to have ample space for carrying luggage. With the Ritz, Maruti decided to address those needs by redesigning the same platform to generate more space at the back bench and practical boot space. On downside it became slightly boxy at the back, apparently designer tried hard to mask that effect but end result was not that exciting. Thus you will see Ritz in the fleet of Taxi aggregators, but never Swift.

Ritz too brought in incremental sales unlike the cross badged products from other manufacturers failed to. Product planning approach seems to be spot on but when styling became a key decisive factor for customer in purchase decision process, Ritz lost to Swift. So, Ritz was not upgraded when Swift transgressed to newer generation in 2011.

In both the cases Maruti was successfully able to augment the market. With success of Kwid, Renault became overambitious and decided to imitate Maruti’s old approach and take its product portfolio to next level with the Captur, but look where they have landed with overpricing and grown up hatchback styling, a reminder of S-Cross launch. When it comes to SUV, what works in Europe may not work in India, because Indian’s love SUV to have strong street presence just like the Americans. Maruti resorted to quick price cut followed by facial update to save the S-Cross. Hopefully Nissan has learnt a lesson before bringing Kicks to Indian market.

Honda’s Earnest Effort

Unlike Hyundai (i20 Active~15%) and Toyota (Etios Cross~7%), Honda put more effort while developing the cross-version of the hatchback. While Hyundai and Toyota cross-version only had side cladding, redesigned bumpers and roof rails to appear rugged, Honda redesigned headlamps and tail lamps completely along with the sheet metal in the front and the rear to beef up the stance with increase ground clearance.

Result is apparent, WRV is lot more expensive than Jazz but it is selling much better too because it is able to offer emotional benefit of C-SUV styling which consumer do value these day. Honda may bring in a proper 4m-C-SUV in future but currently it is riding on the SUV-craze wave much smoothly with WRV.

Bottom line, cross badging has not turned out be a gravy train as envisaged by the manufactures in the past but there are other innovative ways to augment market.

Leading Passenger Vehicle Manufacturing Countries (2000-2017)

In last 2 decades PV Manufacturing Countries have witnessed major upheaval. With rapid economic growth of world’s most populous Asian Economies, world is different now. Below is comparison of the year 2000 with 2017.

Data Source: OICA

OICA Vehicle Type Definition

  • Passenger Vehicles are motor vehicles with at least four wheels, used for the transport of passengers, and comprising no more than eight seats in addition to the driver’s seat.
  • Commercial Vehicles include light commercial vehicles, heavy trucks, coaches and buses.
  • With above classification, let us put the USA production numbers in perspective. Americans love pick-up, popularly called truck in the USA. They happen to be bestselling vehicles in the USA (like Ford F-150, Chevrolet Silverado, Dodge RAM), however, they are classified as light commercial vehicle (CV) and thus not reflecting in these figures. When it comes to CV, list is little different with the USA standing at pole position just like China in PV. Also, Mexico and Canada, leading exporter of CV to the USA, ranks #3 & #4 respectively. Thailand too is in the same league.

PV Production Market Share – Major Gainers & Losers

  • Till 2000 India was closely matched to China’s production numbers but after that China has witnessed exponential growth compare to India’s modest figures, which today made China the biggest, way ahead of any other country of the world.
  • The USA and France has seen negative growth in the period under consideration, and Japan and Germany has seen almost flat growth in growing global market.
  • Demand form emerging nations has grown and since these countries are having tariff (import duty) and non-tariff entry barrier (ownership through JV, local content requirement etc) in place, has ensured, automakers across globe to start local manufacturing.

Continent-wise PV Production Market Share

Subprime Crisis of USA (2007) followed by Sovereign Debt Crisis of Europe (2010), were the inflection point which dramatically shifted the base of production to Asia.

Crisis made Detroit giants to lose their Global #1 and # 2 ranks and prized assets of Europe were later acquired by Asian companies. In the hindsight, some of those who rushed for podium position to gain most from the misfortune of the American automobile giants were later mired in controversies themselves, like, Toyota (Takata-Airbags-Recall), Volkswagen (Diesel-Emission-Scandal), Nissan (Vehicle-Inspection-Scandal).


  • Fast growing markets of underdeveloped Asian countries of yesteryears have become new production hub; notable countries are China, India, Thailand, Indonesia and Iran.
  • Japan and South Korea are still very competitive and leading exporter.


  • Production base is slowly shifting to low-wage East European Nation.
  • Germany and Spain are still very competitive and leading exporter.

North America

  • North Americas low wage story is similar to East Europe, where production is being shifted to Mexico.
  • NAFTA is under re-negotiation, driven by President Donald Trump, may soon alter these numbers, in future.

Global PV Production Market Share

Global PV Production Ranking

(The article is written by Rohan Rishi. You can connect with him at

Auto Industry Sales Analysis – April 2018

Source: AutocarPro

Segmentwise Sales Bifurcation
  • M&HCVs saw 169.26% growth! The sector has really seen some positive momentum post good monsoons and increase in infrastructure related activities. The growth in the segment is a positive indicator for the overall economy as well.
  • 3-wheelers is faring extremely well. While we thought the segment would slowly fade post the advent of 4-wheeler passenger and load options (Ex: Ace/Maxximo, Magic/Minivan); the segment is gaining strength year on year!
  • Two-wheeler segment too saw a double digit growth owing to good monsoons and growth in upcountry markets. With this, India shall continue to be the World’s Largest Two Wheeler market!
  • Though Passenger Vehicle segment saw a positive 7.5% growth; the industry has been inconsistent over months and apart from Maruti, all other OEMs are struggling to make their presence felt.
OEM-wise Passenger Vehicles Sales Statistics – Apr’18


OEM-wise Two Wheelers Sales Statistics – Apr’18


Commercial Vehicle Sales – OEMwise

Model-wise Ranking (2015-2018)

We are happy to present the Model-wise Best sellers for 2015, 2016, 2017 & 2018. For all years, we have considered Jan-Apr figures for apple to apple comparison (Ex: Jan-Apr 2015 figures are taken here, not the entire year).


  • Maruti Dzire is finally the best-selling car in 2018 (Jan-April period)
  • Maruti has moved up in value chain, now it is selling more ₹ 5 Lakhs+ products (Ignis+Swift+Baleno+Dzire+Ertiga+Ciaz+Scross) than under ₹ 5 Lakhs products (Omni+Alto+Ecco+Wagon R+Celerio)
  • Hyundai is more successful with higher priced volume-generating-products (i20+Creta)
  • Tata is making strong in-road with the new products (Tiago+Nexon), while Mahindra is still banking on old work horse (Bolero+Scorpio)
  • Renault’s wonder kid (Kwid) is in free fall (#7-#12-#16), high time for Renault to arrest the fall

(The article is written by Rohan Rishi. You can connect with him at

Indian Auto Industry Performance – FY’18


  • Passenger Vehicles Domestic Sales was at All Time High at ~33 Lakh units in FY18!
  • Two Wheeler sales touched a milestone >2 crore units!
  • Highest Exports of Two Wheelers ever in FY18 at >28 Lakh units
  • Three Wheelers post highest ever domestic sales at 6,35,698 units
  • The overall industry grew a healthy 14.2% & even exports grew 16.1%
  • Three Wheelers exports saw the highest growth surge at 40.1%
  • Passenger Vehicles Exports struggled and posted a degrowth of 1.5%

Automobile Export Sales Statistics – India

Indian Government has been consistently harping on ‘Make in India’ initiatives and the sub-continent has also been an important export hub for several Automobile OEMs. The low cost of operations have been one of the most significant advantage for OEMs to set up their manufacturing base in India. Even the nations talent pool has attracted Auto MNCs to establish R&D Centres too!

Source: ET

However, the Export Output Scenario wasn’t rosy in the previous Fiscal. It remained stagnant last FY, owing to a dip in shipments of cars and commercial vehicles. Rather, exports of passenger vehicles from India declined for the first time in a decade, with automakers shifting small-car production out of India and leveraging capacities in the local market to ship out more profitable premium models. Due to this Ford was able to overtake Hyundai as the nations No.1 Exporter! Even Nissan lost over 38% v/s last year and ranked 6 in the list! The reason being the Next-gen Micra is now being manufactured in France & even Hyundai has shifted the manufacturing of the Euro-spec i20 to Turkey.

OEM wise Exports Stats – Passenger Vehicles

Ford has ramped up Sanand plant in Gujarat and has helped it report over 14 per cent YoY growth in PV export volumes. FCA India saw a jump in its export volumes since it is exclusively manufacturing its right-handed Jeep Compass in India for global sales and we expect the trend shall continue in FY19 too. Even though General Motors have left the country, the focus on exports seems to exist and grew a healthy 17.5% in FY18!

To highlight the significance of exports, we have also added the Domestic Sales for reference:

Model-wise Exports Stats – PVs

Two Wheelers:

Export Stats – Two Wheelers

Within the two-wheeler space, TVS and Honda emerged as the biggest gainers in the volume space for exports. Also the biggies like Bajaj Auto and Hero Motocorp posted below industry growths during the FY. At over 1.39 million exports last year Bajaj Auto remained the unchallenged leader in the two-wheeler category, reporting a growth of 14 per cent in exports last year. Yamaha’s export growth beat the growth of every manufacturer recording a rise of 47 per cent in volumes.

The increasing demand for premium motorcycles from developing countries will aid two-wheelers export growth in coming years. OEMs are increasingly shifting focus to export markets, particularly in the premium motorcycle segment. Two-wheelers exports volume growth was earlier largely seen in the mid-segment of 110-125cc, which grew 50 per cent YoY in FY18 and its share in overall exports volume increased to 15 per cent from 12 per cent in FY17.

To highlight the significance of exports, we have also added the Domestic Sales figures for reference:

Modelwise Two Wheeler Exports Stats

Tractor Sales Statistics – India

Tractor sales have been on a continuous rise for past several months due to 2 successive years of good monsoon, improved crop production, easy financing options and growing use of tractors in non-agricultural sectors. The government’s focus on roads and highways development as seen in Bharatmala project was also a positive factor for the higher tonnage tractor segment and the players therein. While there continues to exist variations in growth across regions, a majority of the regions have recorded a moderate to healthy growth in volumes, helping the industry volumes touch a new peak on pan India basis in the current fiscal year.

The government’s continued focus on promoting rural development and farmer welfare in the Union Budget continues to favor well for the farm sector. Also the budget lays significant emphasis on the government’s endeavor to double the farmers’ income by FY-2022. The success achieved in implementation of a mechanism to ensure healthy minimum support prices to farmers will remain critical in helping protect the interests of the farmers. Improvement in the rural economy over the medium to long term and successful implementation of the various initiatives is likely to result in sustainable benefits to the farm community. This will surely support tractor’s demand in coming times.

So how did the Tractor OEMs fared over previous 3 Financial Years –

The sector saw an impressive >22% growth and many OEMs also reported their best ever sales figure for a FY! M&M+Swaraj sold over 3 lakh tractors in the domestic market last fiscal, its best ever performance in a financial year. It also held a combined >42% Market Share in the sector and has clear dominance in the Market Share. Also note that OEMs like Escorts, Sonalika & John Deere fared better than Mahindra Group in terms of YoY growth. A better assessment would be the Market Share growth of these Tractor Manufacturers –

  While M&M+Swaraj have gained significant YoY growth; it has lost in terms of Market Share. The biggest gainer in FY17-18 was John Deere! It has silently jumped from a Market Share of 6% in FY15-16 to 9% in FY17-18. Other gainers were Escorts & Sonalika who registered a Market Share of 11% & 12% respectively.

Future of Brand VW in India – Report

Volkswagen’s decade in India. Beyond?

From mid of 2017, VW Cars India is frequently in the news with stories of exits from key leadership positions, new appointments and of course the future plan. Why not, after all VW is a decade old now in India. India journey started with top down approach with premium cars landed first to build the brand’s foundation and later followed by volume products. Since they were quite late to the party, they splurge big on brand building (innovative ad campaign) and dealer management. Some dealers say that VW inventory credit period was longer and VW used to absorb higher % share in the discounts offered to customer, quite different from the then norms.

In 2010, they had ambitious plan to have 20% market share by 2018, later it was toned down to 8% in 2014. 10 years on, almost all premium products have gone off the shelf and VW is left with aging and struggling product portfolio and market share of mere 1.5% in India, unlike the leadership position VW hold in some of the biggest car market around the world, like – Germany (#1-21%), China (#1-17%), UK (#2-8%) and Brazil (#3-12%).

New plan, as reported, is having modest target to reach back to the 2011 level of 3% market share in next 5 years, and not eschewing leadership position. Assuming overall industry grows at healthy annual rate of 10% from here onwards, VW need to revive the existing products and fill the portfolio gap quickly to reach 13k monthly mark.

What makes the modest target seems more tough is the fact that the highest monthly sales VW could have ever achieved were in 2011 and 2012 when all the products were in glory days.

Of course history is not the future, market is growing and VW too will strive to grow, but 34% CAGR, from here onwards is challenging, especially when they are still contemplating either to have new MQB platform or older modified PQ 25 platform to underpin the future product pipeline. MQB-CKD (Completely Knocked Down) product assembly is not much cost effective in India and thus cut them short on pricing products competitively. Also lower level of localization means higher price of after sales spares which will effectively inflate customer’s cost of ownership, denting the long term value proposition.

Meanwhile, in order to promote Make in India initiative, Government of India in 2018-19 budget has raised custom duty (tariff barrier) on imported component, that essentially translate into higher price of vehicles which have higher imported content or CKD products.

Current Product Portfolio and Performance

Since 2010 VW took the baton from the Skoda to lead the volume segment and had a very good start and market share. It even developed India focused product like 4m sedan, though it is not working well. VW is slow to react when it comes to management of product life cycle (mid-life refresh and upgrades) and delay in bringing new generation Polo and Vento has resulted in loss of market share. Below table shows how VW is doing not so good despite having presence in fast growing segments.

Pricing of CKD products assembled in India, like Tiguan, is not going to help it to gain much of the volume. From current 100 monthly average figures it can go up to 200 monthly mark. Moreover conservative styling will make it to be called niche.  Being niche in under ₹ 35 Lakh segment makes existence quite vulnerable, as what we have seen in the case of Skoda Yeti. Jetta and Passat segment have become niche now, with SUV onslaught, in future segment could taper down further.

In short, future growth of VW is hinged upon the success of next generation launch of Ameo, Polo and Vento, and introduction of new products in other segments.

2018 and Beyond



Smallest VW hatchback on sale around the world is ‘up!’. Going by the dimension of the car on sale in the UK, it is similar to the size of Wagon R, slightly wider though. Feasibility study need to be undertaken if it can make a mark in slowly de-growing segment, as there is high chance of VW not being able to get the pricing right owing to their Indian cost structure.


If ever VW plans to develop new global hatchback for small-car market, they need to keep Maruti Swift in mind and try to accommodate Indian market need as well.


Polo is smart looking car, but its aging, and perhaps not in a good way. Brazil already got the new Polo, but India launch is nowhere in sight. On top of that VW has downsized naturally aspirated petrol 1.2L engine, may be in order to gain higher mileage or meet the tightening emission regulation. Well sooner or later buyers will realize the downside of low torque figure and its effect on city drivability and highway overtaking. That may not go well, when competitors are easily able to deliver better mileage, power and torque from larger 1.2L engine. Newer generation Polo with 1L naturally aspirated petrol engine might struggle to make headway in a segment which will soon get crowded with upcoming and highly promising products from Tata and Kia.


Large sedans are ceding ground to SUV. Only hot segment is sub 4m, which is growing rapidly. But segment is dominated by Maruti Dzire which is becoming stronger with every outgoing generation. But Maruti doesn’t seem to be complacent; rather they are bringing newer generation much faster than competition and always raising the bar.

Sub 4m

Ameo looks awkward from side profile. Numbers are slowly tapering, hopefully new and better Ameo could be on offer in next 3-4 years. Challenging Dzire with puny 1L engine will make task tougher.


Vento is competitive but is missing big time on timely upgrades. In fact it is doing much better with Skoda’s logo, as Rapid. Newer generation will help to gain market share, still Honda City may continue to have better pricing power in the segment and Ciaz the most value for money. Upcoming Toyota Yaris will make life tougher for all players as segment is not expanding due to rise in similarly priced compact SUV segment.


Jetta always has to be second fiddle around cousin Octavia. In has seen two discontinued generation and little success when it comes to numbers.  VW sedans are smart looking, like man in tuxedo, on downside all products look quite similar and sometimes difficult to differentiate. But Skoda’s crystalline design is very striking and exude more premiumness thus has an upper edge when it comes to premium quotient.


Passat simply enhances the Skoda Superb value for money appeal. In company of large SUV products, it is just a quest for survival.


In recently ended 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. That is why, size is definitive parameter for product segmentation followed closely by price range.

Apart from functionality, there is uncanny obsession for owning something which offers commanding position from inside the vehicle and posturing intimidating image outside. That brings the willingness to pay higher price. For example consider Maruti Baleno (Hatchback) and Brezza (C-SUV), both have similar footprint, however, Baleno offers more in-cabin and boot space. Still buyers are willing to dish out additional Lakh ₹, just to satisfy their emotional need with an (pseudo) SUV. Because on functional side, buyers get mere 15 extra BHP, for a Lakh ₹!

Under 4m

Stop gap 4m SUV recipe is very simple, take a 4m hatchback, increase ground clearance and tweak the silhouette to look like an SUV, just like Honda WRV. Or take a longer route (time & investment) to completely change the body shell along with the mechanicals. With the current GST structure, and growing obsession for compact SUV, 4m length vehicles are here to stay. So best way is to have a completely new product just like Ameo. Leveraging modified version of Skoda’a Vision X concept build on MQB A0 platform may be more cost effective solution in long term for India.


As reported, VW is planning to introduce Hyundai Creta rival. From VW’s global portfolio, T Roc seems to fit the bill in terms of size. However, in the UK it is priced very closer to Hyundai Tucson, which will make the product unviable in India. So underpinning has to be different, though retaining the outer shell. VW need to be very cautious with the pricing, the moment it crosses ₹ 15 Lakhs mark, it will get into the territory of Jeep Compass and price inelasticity will hammer down the volume. Reason is VW overall doesn’t have strong pricing power in India as enjoyed by Honda, Toyota and Skoda in some of the premium segment. VW need to acknowledge the ground reality of India, in regard to its brand image and pricing power. Brand image of Skoda was created by Octavia and Superb, which are well regarded as premium vehicle in India. But VW brand image was created by more common in sight, Polo and Vento, thus in India, Skoda has an edge when it comes to premium image and pricing power. Brand image is something which is engraved in psyche of onlookers and customer alike, and enhancing it after certain point in time, on company’s own will, is more challenging, but going downhill is pretty easy.


Pricing of Tiguan has put it on the spot. Its conservative styling and size will appeal to the sensible buyers, implying those who don’t want to flaunt their SUV. That pushes it into niche segment. Size wise it is in territory of Compass and Tucson. See how aggressively priced Compass is doing well.

But pricing lands it into big boy’s territory which are far more appealing, though may not be sensible as third row of seats is seldom used. Lack of sheer size and pricing power is reflecting in the numbers which is quite low in comparison. Look at Skoda Kodiaq which easily got away with such steep pricing. That’s what brand image is all about.

Availability of CKD import may improve numbers but not too much, similar to overpriced Hyundai Tucson. Just like Americans, Indians too love their SUV to be big, if not, then at least have strong road presence. For example, in ₹ 25 Lakhs+ price range, Toyota Fortuner really commands Lion’s share across Sedan-SUV segment.

4.5m-4.7m & 4.7m-5m

Only product in VW’s global portfolio that fits into the segment is Touareg (4.8m). VW tried its luck twice with CBU (Completely Built Up) import Touareg but with no success to show. Some international reviews say that it is as good as an Audi SUV. But question is, wouldn’t potential buyer opt for Audi Q7 for few Lakhs ₹ more, instead of a vehicle which comes with VW logo on front radiator grill, which is same as on ₹ 6 Lakhs Polo. Perhaps Brand Conscious buyers would prefer Audi.

Having said that, Toyota is still able to sell twice as expensive Landcruiser 200 with quite an ease. Landcruiser brand is built on strong past credential and heritage which VW SUV doesn’t have. That’s the game of brand in India.

Safety as an USP (Unique Selling Proposition)

In one of the test drive session, sales representative from VW dealer claimed, that when it comes to safety, VW is Volvo of mass market segment, implying highest safety standard. However, competitors can easily match the standard. For example in the year 2014 & 2015, Global NCAP has had crash tested Indian made cars and awarded 4 star safety rating (out of highest possible-5) to both VW Polo and Toyota Etios for adult occupant protection(frontal passenger). So safety as an USP will not hold for long. In fact, Ford is providing 6 airbags on some of its vehicle priced under ₹ 10 Lakhs.

On a side note, Volvo is well known for its safety obsession, remember when they invented three-point seat belt and let it go off-patent, so that vehicle manufacturers across the globe could adopt it and make vehicle occupants across the globe to travel safely. That is incredible way of saying that we care for your life.

Sales & After Sales

Right product at right price is three quarter way through the game, rest all depends on sales and after sales experience. Look across several consumer and automobile forums and one can observe that there are issues with availability of spares, pricing, and quality of service rendered at service station. Keeping channel partner happy is good thing but aim should always be to keep customer happy, the real provider of green bill. Word of mouth has pretty strong influence in buying decision process, so even one unhappy customer, will lead to future loss of other potential customer(s).

Would VW exit India just like GM?

A year before winding up sales operation in India, GM too has shown commitment of Billion $. But then GM has exited from Europe too. After 2007 American financial crisis, GM has lost the #1 global ranking and settled down for #5 ranking by 2016. Some automakers say that India is a tough market, well, every country-market is unique in itself, a tough nut to crack and India is no different. For example Suzuki’s Indian Subsidiary Maruti is super successful, however, their American subsidiary had gone bankrupt in 2012 and eventually they pulled out from the US market. So it all boils down to business jargons like – priority, focus, ambition, capability, resource deployment, competency development etc..

VW India case is little different from GM. Two decades of unsuccessful operation has left GM with lot of accumulated losses on its books in India, for the period of 2014-2016, GM had a negative operating margin and cash flow but VW has had positive operating margin and cash flow over that period, even better than Honda and Toyota in some years. Moreover, for VW Group as a whole in India, has Audi as cash cow and Porsche, Lamborghini and Bentley are icing on cake, so literally VW Cars India has luxury to sustain in India. So they may leave, only, if they wish to. However, VW as a group need to be cautious while pushing Skoda to be volume generator in India because brand dilution is inevitable if Skoda goes whole hog to cater lower end of hatchback segment, in order to gain volume. It is surprising as to why Skoda is chosen at this point of time to gain volume, given the current positioning and reach (VW has almost twice as many touch points) of VW and Skoda in Indian market.

VW could wish to take a lead in electric mobility within the group and plan to bring products initially as halo one, more as a brand building exercise. May be later followed by mainstream products, as and when market matures and become ready to adapt to electric vehicle (perhaps after 5 years from now or even longer) in larger scheme of things.

Possible Future Product-Mix

(The article is written by Rohan Rishi. You can connect with him at