Q1 2019 Analysis – Passenger Vehicles

Q1 of 2019 has seen de-growth in comparison to same period in 2018. A weak consumer sentiment in an election year is reflecting heavily in Q1 of 2019, in otherwise growing PV market. Also, retail fuel price is very much at 2014 level, in fact, much higher for diesel. Illustration below shows how retail fuel price and interest rate on car loan has huge bearing on consumer sentiments and PV industry growth.





Industry Players

Every car maker is suffering, except for those who have had successful new launches, further helped by lower base effect.





Body Style

SUV segment which has shown strong growth momentum in recent past, too, is struggling now. Surprisingly, it’s the MUV segment which fared quite well.





Top 30 Models in Q1 2019:

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

Comprehensive FY19 Sales Analysis – Passenger Vehicles

At the end of financial year 2018-19 (FY19); we thought of deeply analyzing the Indian Automotive scene and assess the segment-wise performance of the offerings in the Indian market. FY19 was an extremely tough year for the Auto Industry and it grew a feeble 2.7% YoY in this fiscal year v/s FY18. Majority of the OEMs reported a negative growth and increased discount outflow hampered their bottomlines even more badly. Similar condition seen at the channel partners end as well where they carried an all time high stock with mounting expenses. The scenario doesn’t look much better this year too where SIAM has projected a single digit growth forecast (3% to 5%) for FY20 owing to rise in commodity price, election, below normal monsoon, BS 6 norms and fluctuating interest rates. However the influx of new OEMs (Kia/MG) in this FY could give some required boost to renew the consumer interest and catapult the growth levels as well.

Let’s look at the modelwise performance (FY19 v/s FY18) –





Top 25 selling models for FY19 –

So you may be thinking which segments actually in previous Financial Year? We shall try and answer the question with the mentioned stats –

Entry-Hatchback Segment: 

  • Apart from Alto; all other models reported heavy fall in volumes. The overall segment grew a phenomenal -15% in FY19 v/s FY18
  • Nano and Eon also saw their exit from the Indian market this year. The Industry has gone through a major transitional phase and the Indian Market which was once considered a hatchback dominated market is slowly upgrading to other segments.
  • We doubt if any OEM shall even try to launch a new model in this segment. In long run, Alto shall be the only contender here! Hope, Renault could work some magic on refreshing the Kwid and give it a fresh lease of life to rightfully compete with Alto.




Compact-Hatchback Segment:

  • The segment saw a positive growth of 6% owing to launch of new model (Santro) and refreshed avatars of Swift, Wagon-R. However; the point to note is that out of 14 offerings on sale in the segment in FY19; 9 models reported a decline in sales! It again came as a tricky segment for the OEMs and apart from few established marques; no other models is faring well.
  • Santro too was expected to sell much better; but the model failed to meet the expectations. Even; the late launch of refreshed Wagon-R resulted in decline of volumes for the model.




Premium Hatchback:

  • Baleno & i20 have been doing excellent in the segment and both have continuously listed themselves in the Top 10 selling cars this year.
  • Baleno has been giving tough competition to its sibling Swift and the volume difference between them was a mere ~11k units in this FY. Seeing the trend; we anticipate Baleno to outsell Swift in FY20!
  • Freestyle gave Ford the required volume boost in the absence of Figo. It was successful to overtake both Polo & Jazz in terms of FY19 volumes basis aggressive pricing and cross-avatar.
  • Both Polo & Jazz struggled in FY19. Jazz volumes almost halved in FY19 when compared to FY18!




Compact Sedan:

  • Amaze proved be a savior for both Honda and Compact Sedan segment in FY19! The model was one of the most successful launches of previous FY and in a way revived the segment. Compact Sedan sales shot up 13% and Amaze was single handedly responsible for the double digit growth!
  • Apart from Dzire & Amaze; all models reported a decline in volumes. Compact Sedans have always been compromised models (elevated hatchbacks) to fall under the sub-4m category. The consumers are not particularly happy with the compromise and has reflected in the sales of the offerings in the segment.




Executive Sedan:

  • The segment reported a double digit de-growth in FY19 and apart from Verna all other models saw a decline in the sales.
  • Toyota entered the segment after a lot of anticipation with the Yaris. However; even Toyota failed miserably to make its presence felt in the segment and now the competition lies between Ciaz, City & Verna only!




Premium Sedan:

  • ‘A dying segment’ – would be the apt words to describe the volumes here. However; Honda swam against the tide and launched a model in the segment this financial year. And the result was surprisingly good – Civic’s single month’s sales was almost twice of Elantra’s volumes for the entire FY!
  • Will be interesting to see if Civic could woo the buyers continuously and help the segment stay afloat. All other models in the segment have been struggling to garner a sale of even >300 units/mth! Even adding Civic’s volumes; the segment degrew -7% in FY19 v/s FY18.




Luxury Sedan:

  • We have termed these models as luxury sedans as they cost almost similar to the Luxury OEM offerings! However; the segment is losing its sheen and the sales of these models are even lower than the luxury OEM models sales.




Compact SUV:

  • The segment grew a positive 6% in FY19 v/s FY19. Brezza volumes have been a matter of envy and all OEMs are rushing to grab a pie in the segment. Mahindra launched the XUV300 & now Hyundai is planning to place its ‘Venue’ in the segment.
  • WRV & TUV300 lost heavily and reported a degrowth of -31% & -33% respectively. It clearly highlights that the Indian consumers are extremely demanding and shall not allow any compromises in the vehicle they chose!




Mid SUV:

  • Mid SUV has caught the fancy of new OEMs primarily due to the sudden shift of consumers preference towards bigger SUVs. It is also important to note that the OEMs expenditure on bringing a new model (either SUV/Sedan/Hatchback) is the same; however the margins that the OEMs would make in the SUVs would be comparatively much higher! Hence; it is financially attractive too for launching a SUV.
  • Creta was undoubted leader in the segment and sold almost equal to Grand i10 volumes! Creta ranked 9th in the Top selling vehicles list and the performance was nothing short of a blockbuster!
  • Even Tata & Nissan have tried to make a mark with the Harrier & Kicks in the segment.




Premium SUV:

  • Saw launches from M&M (Alturas) & Honda (New CR-V) in FY19. But; the segment saw a decline in overall sales. Even the mighty Fortuner & Endeavour reported a double digit fall in volumes.




Lifestyle Offroader:

  • With stringent upcoming Emission and CAFE norms; the models in this segment are either going for a makeover or an upgrade.
  • Gypsy saw the end of production this year and hopefully should be replaced by Jimny. Even M&M is working on an updated Thar whose launch is due in FY20.




Vans:

  • Vans reported the highest growth comparatively among all segments! Only Maruti models are in sale in this segment and clearly shows why Maruti is a market leader in India!
  • If you add Omni+Eeco sales for FY19; the numbers are almost equal to Honda Cars India volumes for FY19. Do not understand why no other OEM is even bothering to enter this segment.








FY19 Car Sales – Snapshot

The Passenger Car Sales grew  a meager 2.8% in FY19 (Apr’18-Mar’19) v/s FY18 (Apr’17-Mar’18). We had anticipated a growth of over 6% in this financial year; but the growth forecasts were dropped by >50% citing the falling demand, increasing interest rates and liquidity crunch. Not to forget the other deterrents which hampered the growth plans – Kerala Floods, Volatile Fuel costs and increasing Insurance costs. Even the channel partners (Car Dealers) saw their worst phase in the business where almost all brands were carrying excessive stocks.



Let us see the YoY performance comparison of the OEMs –

  • Interesting to see that the Top 7 OEMs posted a positive growth in FY19 v/s FY18 and remaining all 5 OEMs registered a YoY de-growth!
  • While Tata posted the highest growth amongst all OEMs; It was Nissan+Datsun which seems to lost the track completely. It not only saw a slump of ~31% in terms of volumes; the new launch ‘Kicks’ too isn’t performing as per expectations.
  • Do note that Tata was the only OEM to register a double digit growth in FY19! Surprisingly Tata achieved this feat with only 1 new model Harrier which launched in this timeframe (that too at the fag end of the financial year). It is nice to see that Tata is not only focusing on new model launches; but equal significance is given to elevate their existing portfolio sales.
  • The growth for the Market Leader Maruti was supported by the Arena channel (6% YoY). Nexa struggled in previous FY and the sole dependence on Baleno is now showing up.
  • Hyundai could post a flat growth (2%) and this too was possible with the introduction of the iconic Santro. However Santro wasn’t exactly a successful launch; Hyundai is pinning its hopes on the launch of the Compact-SUV Venue to gain volumes this year.
  • Even with 2 new models launched this year (Marazzo & XUV300); Mahindra’s YoY growth was mere 1%!
  • Honda grew a healthy 8% in FY19 owing to the tremendous success of New Amaze. With no new models in pipeline this year; it looks to be a difficult year for the Japanese major.

In terms of Market Share; Maruti gained the most! Maruti Suzuki’s Market Share increase by 1.2% in FY19 and the Market Leader could capture a Market Share of whopping 51.9% in the Indian market! Can the likes of Kia, MG & Citroen really challenge Maruti’s success run in India? Only time shall tell.








Top 10 Selling Cars of Mar’19!

The Top 10 selling cars sold a total of 1,43,896 units in Mar’18 and contributed to >50% of overall car sales in India! And 8 out of the Top 10 cars were from Maruti’s stable.



  • Maruti’s most ‘Dzire’able car tops the chart and sells ~20k units in Mar’19. Dzire is now continuously ruling the chart and looks to stay here for a while.
  • Baleno ranks second and sells >17k units in Mar’19. The Nexa’s blue eyed boy contributed to >65% of Nexa’s volumes in India.
  • Alto is pushed to third rank and shows signs of ageing now. The entry-hatch volumes are draining down and 2 models mark their exit in FY19! (Nano & Eon). The performance of the models in the segment is as shown –

  • The New Wagon R is working the trick and crossed 16k units after 11 months. The Tall Boy ranked 4th in the list.
  • Dzire’s younger sibling Swift could only cross 14k units and stood fifth in the ranking table. Sixth Ranked Brezza was just 37 units short of Swift.
  • i20 was Hyundai’s best seller for Mar’19 and sold over 12k units. Hyundai’s second best seller was Creta – Grand i10 now moves out of the Top 10! Maybe a refreshed avatar of Grand i10 is on the cards?








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

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

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



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

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

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








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

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



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

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








Luxury Car Market Potential in India

Background:

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

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

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

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

India & its potential:

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



Feedbacks from CEO’s – Luxury car Market:

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

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

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

OUTLOOK FOR 2019:

Cautiously Optimistic is the Word for 2019…








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

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



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

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

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








Harrier overtakes Compass & XUV500 sales in Mar’19!

Warrior Harrier!

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



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

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

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