2018 Passenger Car Market Growth Analysis

Slowdown in growth rate of 2018, has spilled over in 2019. With growth at risk, 2019 could prove to be a very challenging year for all the manufacturers, including luxury brands.

Body Style

  • Hatchbacks not only grew at the slowest pace but also ceded market share
  • In other segments, growth was driven by few products
  • MUV growth was driven by the new entrant in the market – Mahindra’a Marazzo
  • Sedan growth was driven by incremental volume of Maruti Dzire and new Honda Amaze
  • SUV growth was led by incremental volume of Tata Nexon, Hyundai Creta, Maruti Brezza and facelifted Maruti S-Cross




Vehicle Size

  • India continues to be a small car market, with 77% of cars sold are less than 4m in length
  • In over a decade (after 2006 Government’s new policy), car manufacturers definitely learnt to package the car in such small footprint
  • In medium (4m-4.5m) segment, its only Hyundai Creta and Maruti S Cross, that brought incremental volume, rest just suffered
  • In large car segment it’s the MUV segment which grew (Toyota Innova & Mahindra Marazzo), rest saw a decline



Body style deep down analysis

For this analysis, product classification is primarily based on length, which ideally should define the in cabin space available for the buyers. Further, sub classification is based on the value proposition manufacturers bring to the table, to differentiate their product.

Hatchback Segment

  • Entry level hatchbacks seems to be out of favor now
  • It seems buyers are opting for larger hatch even as first time car purchase
  • New launches too didn’t brought much excitement in small hatchback segment
  • Case is Hyundai Santro, which is averaging around 8,000 per month, since launch
  • Much lower than its premium (- relatively) cousins – Elite i20 (12,000) & Grand i10 (11,000)
  • One more reason for Santro’s low number is heavy discounts being offered on outgoing cousin Grand i10
  • Carmakers need to seriously revisit small hatchback product strategy
  • For small cars, margin is usually low and automakers thrive on volume, which is shrinking now
  • Honda has shown some prudence, in line with the growth trend by discontinuing Brio, and no plans to bring its successor in India , which is already launched in ASEAN region, thus making Jazz and Amaze as entry level product
  • With demise of Tata Nano, it seems there is less value in serving bottom of the pyramid, as Indian car buyers are moving to high value cars or sometime – ‘no car at all’ in crowded metros, by opting for Mobile App based shared mobility service



Sedan

  • Except for sub 4m sedan, every other sedan segment was in decline mode
  • Growth of sub 4m was led by incremental volumes from Maruti Dzire followed by new gen Honda Amaze launched in mid-2018




SUV

  • SUV data has been split, based on chassis, to gain better understanding of SUV growth
  • Monocoque SUV/Crossover segment has grown much faster

SUV – Monocoque body

  • It is quite apparent that new age more urbane SUV/Crossovers took the charge of leading the segment
  • Very high growth of the two premium (-relatively) segments is attributed to low base
  • Mahindra very cleverly has had positioned its SUV in a sweet spot, by offering large car for less money
  • Now its territory is being invaded by Tata’s Harrier, later in the year will be followed by MG Hector and Tata H7X

SUV – Ladder chassis

  • By splitting data, it is apparent that ‘real’ SUV are not selling so well
  • High stance surely gives them the formidable and imposing image but they aren’t quite urban jungle friendly
  • Moreover, body roll is too high, which robs the driving experience
  • Thus more and more urban buyers are opting for monocoque body construction
  • Tata Safari’s sudden growth is not a sign of revival, but it was due to its supplies to Indian Military

  • Surprisingly, Toyota’s mighty Fortuner suffered decline in sales
  • Reason could be entry of new SUVs in similar price bracket, like – Skoda Kodiaq (Monocoque chassis), Honda CRV (New diesel engine), and little bit of Mahindra Alturas




MUV-Monocoque

  • Drop in Maruti Ertiga’s volume was due to generation change which has impacted the segment growth rate
  • For Maruti, volume decline was compensated by the growth of Eeco

MUV – Ladder Chassis

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

6 thoughts to “2018 Passenger Car Market Growth Analysis”

  1. Excellent analysis of Industry growth at various frames. Maybe manual and auto shift statistics throw some insights on that front as well. The entry segment will disappear soon with upcoming regulations. People are making good choices with an inclination towards space and road presence. Premium sedans have to fight with the trend of compact SUVs to survive with compact sedans providing bigger boot space. Less number of safer cars are better for Indian roads than more number of entry-level cars. There will be a spike in growth before April 2020 considering the BS VI deadline and the mindset of OEMs in India.

  2. For any analysis related to Automobile Business, the first reference I use to do is going through your website in detail. All your insights and interpretations are crystal clear and unbiased. Great job done by you and your team.

    Here, I would request for two wheeler sales month wise, model wise YoY growth data for this fiscal year 2018-19. Pls do share.

  3. Excellent work Rohan Rishi. Keep it up!!
    Kindly continue this analysis going ahead in the exact same format. Very insightful.
    Thanks for your efforts.

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