End of the road for Toyota Etios, Liva and Corolla in India

As India progressed to BS6 era; Toyota announced the the departure of Etios, Liva and Corolla from its lineup in the Indian market. Practically the dispatches/wholesale of these models had stopped prior to January 2020 itself.

Both Etios & Liva were ‘Made for India’ models and Toyota had lot of aspirations from these models to strengthen their presence in the Indian subcontinent. The Etios nameplate comes from the Greek word “Ethos”, meaning spirit, character and ideas. The sedan version was launched in December 2010 and the hatchback version (called Liva in India and Valco in Indonesia) was launched in June 2011. Both Etios & Liva will be discontinued in India as the Bharat Stage 6 standards goes into effect in April 2020. As Toyota had no interest to upgrade the Etios/Liva to meet the new emissions standards, it will be indirectly replaced by the more upmarket Yaris as sedan and Glanza as Toyota’s subcompact car offering in the country.

In the decade of their existence; Etios sold 2,73,843 units and Liva sold 1,74,665 units. The sales trend saw a dip consistently since the past 5 years and was a cause of concern for Toyota India. Toyota even pitched both Etios & Liva aggressively in the taxi segment to hold to the volumes. Infact; Etios was also revered among the Taxi buyers and was famed for its low cost of maintenance and frugal diesel engine. However; the road comes to an end for both the models now.

Toyota India also announced the discontinuation of its global best seller of all time – Corolla. The Corolla nameplate has been sale in the Indian sub-continent since 2003 and has sold 1,16,497 units since its existence in India. In 2003; India received the Ninth Generation E130 detuned version and has been one of the favorite models among the buyers in its segment. Corolla got immediate fame at its launch and sold over 8k units in the first year of its launch itself. However; its volumes declined to 1,422 units in 2019. In global markets; the current generation Corolla is being replaced by all-New model. Owing to low volumes; Toyota did not see the viability to bring in the next-gen Corolla to India. The sales trend is highlighted for reference –

Top 25 Selling Cars of FY2020

We have been closely monitoring the sales statistics of the Indian Automobile Industry and we place higher weightage to the FY (Fiscal Year) data as it represents a longer timeline and gives a clearer picture of the sales trend. The Indian Automobile Industry witnessed a turbulent FY20 and degrew -17.3% in comparison to FY19.

You may ask on why we have an exclusive post for Top 25 selling cars – The sole reason is that these 25 cars contributed to over 82% of the overall cars sold (among 101 models on sales in the Indian market). If you dive even further; the Top 10 models sold almost 52% of the overall cars sold in India!

Before going to the Best Selling cars of FY20; you can refer the FY19 sales performance – here.

  • Maruti Alto retained the Top Slot and emerged as the Best Selling Car of FY20. However; it degrew -26% in FY20 v/s FY19.
  • The Top 7 models were from Maruti’s stable. And apart from Maruti; 3 Hyundai models fared in the Top 10 list.
  • i20 was the Best Selling Hyundai for FY20. It had a significant lead from the likes of i10 & Venue to emerge as the best seller.
  • The Non-Maruti & Non-Hyundai in the Top 15 were – Kia’s Seltos & Mahindra’s Bolero.

Brand Image – Which OEMs can command PREMIUM in the Indian market?

Brand Image and Perception have a huge impact on consumer behavior and it in a way defines the extent a customer is ready to pay a particular brand’s product. Ex: A customer easily pays over ₹50k for an Apple Mobile phone; whereas he/she may not shell the same amount of money for a Mi phone. The primary reason is that Apple has over the years established its brand image as a tech innovator and customers perceive the quality of Apple products to be Top notch as well. So which automobile brand can command premium like Apple does in Cell Phones?

We have calculated the models sold by the respective OEMs in the Indian market and bifurcated it into different price range (0L-5L; 5L-15L and >15L).

  • Do note that India’s biggest car maker Maruti has never been able to make a mark in ₹15+ Lakh price segment. Earlier Maruti did try to venture in premium segment with products like Kizashi and Grand Vitara; but both the models proved to be a dud. While Kizashi could sell only 785 units in its overall lifetime; Grand Vitara could sell 1,694 units over years of existence in the Indian market.
  • Even in 2019; 100% of the portfolio of Maruti Suzuki were less than ₹15 Lakh price point and 36% of the cars sold by Maruti fared in ₹0L-5L price range.
  • Maruti did try to command premium by launching a new channel ‘Nexa’; but surprisingly not a single model was launched through the channel which was priced over ₹15L!
  • With success of Kwid and Triber, Renault has moved into high volume and low margin segment, major downside of this strategy could be brand image, free cash flow generation, dealer profitability and pricing power in long term.
  • Renault had a promising launch in the Indian market where its first launch ‘Duster’ sold in good numbers. However; its decision to venture into entry-hatches (Kwid) proved an un-viable decision. While Duster’s brand equity dropped over years; the higher priced products like Captur failed to make an impact.
  • Hyundai has been time and again trying to bring in premium products namely Elantra, Santa Fe, Tucson; etc but has faced limited success till date. However; both in terms of attempt & success – Hyundai fared better than Maruti.
  • Mahindra, Tata & Ford have been able to sell butch SUVs in the ₹15+ L price range. However; the volumes as such needs to pull up to make a significant case.
  • VW & Honda looks like they’ve lost the path. Honda had launched iconic products like Accord, Civic, CR-V in its yesteryear; but on the pursuit for volumes it lost the ‘premium’ tag that the brand commanded. While Accord, Civic & CR-V were blockbuster models when they were launched initially – it could not find buyers when they were relaunched recently. Starting with Brio in 2011, low cost-mass market driven strategy has costed Honda its premium sheen it use to enjoy a decade back with cars like Jazz, City, Civic, Accord & CRV
  • Similarly VW seems to have lost its mojo – Only 5% of the cars it sold were in >₹15L price range.
  • Despite Tata Nano inspired cheap products, like Etios & Liva, Toyota never lost its premium luster, it seems Corolla, Fortuner and Innova have had firmly rooted Toyota’s premium image in India – quite an interesting consumer behavior

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

FY2020 Car Sales in India – Snapshot

Indian Passenger Vehicle Industry registered a double-digit decline of -17.3% in FY20 v/s FY19. Around 27,57,062 cars were sold in the Indian Sub-continent between April 2019 to March 2020; while 33,32,270 cars were sold between April 2018 to March 2019. While; we expected the Indian Automobile market to grow and get near the 40 Lakh sales market; unfortunately it fell below 30 Lakh units in FY20. The huge decline in sales was unprecedented and was primarily affected by muted economy, BS6 transition and Covid 19 impact. The Fiscal Year also witnessed the launch of 2 New OEMs into the Indian Market – Kia & MG Motors. The timing in particular was extremely bad for launch; however both OEMs went against the tide and fared extremely well. While Kia emerged to be among the Top 3 OEMs in Feb’20 & Mar’20; MG is now consistently faring better than the likes of FCA, VW, Skoda or Nissan. The potential in the Indian market is still bringing in a lot of investments from New brands such as Citroen, Great Wall Motors or Haima.

  • Maruti managed to maintain >50% Market Share in India even though it degrew -18% YoY. However; it lost Market Share of -0.6% in FY20.
  • The Top 3 Gainers of Market Share in FY20 were – Kia Motors, Hyundai & Renault. Kia registered a Market Share of over 3% in the first year of operation itself. It is not an easy feat in the complex Indian market.
  • The Top 3 Losers in terms of Market Share were – Honda Cars, Tata Motors & Maruti Suzuki. No new model launch by Honda in FY20 costed it big and it lost a monumental -1.8% Market Share!  Tata’s fate in particular is not supporting the brand and even with multiple new launches; it failed to make an impact in sales.

Market Share Chart for FY20 – 

81% cars sold in Indian market in the Year 2019 were having a price tag of under ₹ 10 Lakhs!

We believe that a customer first decides the budget and then decides the segment/model of the car that he or she shall purchase. Hence a consumer having a budget of ₹10 Lakh may purchase either an i20 (Premium Hatch), Brezza (Compact SUV), Honda City (Executive Sedan), Kia Seltos (Mid SUV) or any other model/variant which shall fit in the budget. Gone are the days where consumers would first decide the segment and then the model – It is more of deciding the budget now and then the model is finalized irrespective of the segment basis the customer’s taste.

The Price Range Sales shall give a detailed insight on what price bands found highest number of customers. It shall also give us a glimpse on what amount the customer is ready to shell out to purchase a vehicle.

  • 81% cars sold in Indian market were having a price tag of under ₹ 10 Lakhs (Ex-showroom)
  • High indirect tax rate makes India a low value car market, as major chunk from buyer’s valet goes to Government(s)
  • Only 6% buyers could afford a car that cost more than ₹ 15 Lakhs (Ex-showroom)
  • This indicates low level of purchasing power, wealth growth and higher wealth concentration in hands of few

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