3 wheeled sprinter

INDIAN 3 WHEELER INDUSTRY

After the advent of the revolutionary Tata Ace in 2005, analysts believed the Indian 3 wheeler Industry would slowly be phased out and be replaced with efficient 4 wheelers.  Even Industry Experts were betting big on bringing more 4 wheeler cargo/passenger trucks into the market. The more powerful, stable, upmarket & value for money 4-wheeled offering was a real scare for the 3 wheeler industry. The market changed drastically and slowly the sale of 4W numbers was higher than 3W.  The industry also saw a steady decline in the year 2006 to 2008 as a resultant of aforementioned reasons. Suddenly the vehicle stability, long distance travel, interior space, higher payload, increased speed and car like comforts/driving were the value propositions sought by the Indian buyer.

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As said and the done, the future was very different. The 3-wheelers suddenly emerged out of the grave and proved a valuable business proposition to the auto makers. The cognizance of the 3-wheelers was undeterred by the mighty 4-wheelers competitors. It grew manifold after 2008 and still is the first choice for the value conscious commercial vehicle seekers. The production almost touched 8 Lakh figures in F11 is the best example of its success story. So what is it that kept it alive???

Let’s start with a brief on the Indian 3 wheeler Industry: 

The 3 wheeler market in India is over four decades old and is currently the largest 3 wheeler market in the world. Initially only 3 wheeled passenger autos were introduced. Later in eighties lower capacity cargo carriers were introduced – 0.5 Tons open body Pick-up van. Till late eighties, 3-Wheeler market was virtually ruled by Bajaj Auto Ltd. Late eighties – early nineties, new manufacturers developed higher capacity category by introducing 6 seaters & 0.75 Tons Cargo carrier. Late nineties saw a renewed interest in the 3-Wheeler market. Optimism about growing need of free mobility as well as the need for remote and efficient distribution of the goods and services was the key factors for the same.

The OEMs involved in manufacturing 3 wheelers –
Slowly according to the market requirements LPG & CNG variants were also launched. The stringent government regulations also threw out the diesel variants from the city. 

The Segmentation of the industry emerged as follows –
 

Key Drivers to the sustainability and growth were:

1. Last mile transportation needs –
Its small turning radius, ideal for intra city operations and easy to drive in narrow roads made it the favorite for small distance load/passenger carriers. Its maneuverablity allowed it to pass through even smallest lanes of the town. High product maneuverability & driveability had been always ideal for congested Indian roads and tropical conditions.

2. Inadequate urban & rural public transportation infrastructure.
Infrastructure remained the biggest concern. Unavailability of structured roads/highways didn’t allow the 4-wheeled machines to bloom. The 3-wheelers still proved to be the fastest and most viable alternative to the narrow, pot-holed Indian roads.
3. Low initial ownership/acquisition cost
It is still the most economical vehicle in the commercial  vehicle industry. Better mileage and Pickup Low maintenance cost along with amazing price and better load optimization made it the perfect choice! The low EMI’s stood as an attractive option and the easy availability of spares in the local market was another added advantage. 

4. Self-employment opportunity

Various subsidies offered by the state governments encouraged the unemployed youth to openly accept this opportunity of owning it and make-a-living out of it.

Indian 3-wheeler market has seen its fair share of up and downs. Considering the exciting phases it has been through we had no doubt in calling it a ‘3-wheeled sprinter’ who has able to keep upto speed to the market requirements and has evolved to survive the dynamism/vulnerability of the Indian Automobile market. It’ll all exciting to track its growth/decline in times to come.  

Indian Car Sales Figures – November 2011

November 2011 Sales Figures – Pan India

Highlights –

“Every cloud has a silver lining” – This is what the sales figures for the month of November 2011 has to say. Except Maruti all OEM’s have seen a considerable growth in its volume. Even Maruti Suzuki has exceeded the 80k figure after 6 long months! This is a sure shot sign of revival for the industry, and with the slight decrease in petrol price along with the huge year-end discounts we can expect the sales registers ringing this December.
1)     
      1. Nano 2012 is here!!! The increased numbers surely bought some hope among Nano enthusiasts. This brand still has a long way to go in terms to prove its potential.
2)     2. Beat grows over 80 percent than last year – this surely shows how GM was devoid of the market acceptance even after having a winner in hands. With the diesel version it has emerged as a savior to GM and enabled it to sustain its numbers.
3)     3. Eon with its slapstick pricing and futuristic looks has the potential to push Hyundai to the top position in India. But it is not easy to shake Alto’s dominance.
4)      4. Maruti has been able to revamp its supplies – evident from the offtake numbers of 17273 for Swift, 24422 for Alto and 10403 for Dzire. Estilo seems to be in its death phase, we think it is the right time to phase it out.
5)      5. Tata seems to be on Steroids. Both its Indica and Indigo brands are doing extremely well. This is primarily due to the performing Vista and Manza variants.
6)      6. Verna has taken the C-segment by storm. It has consistently proved itself as a rightful competitor over the last 6 months and has strengthened Hyundai’s position in C-segment.
7)      7. Bolero seems to exceed the magical 1Lakh figure this fiscal. It has already garnered 63314 numbers within 8 months of this financial year. Also Scorpio has shown a strong growth this year. With 4646 numbers it has grown over 38 percent over last year.
8)     8. Skoda’s Rapid did a decent start with 957 billings. We can expect it cannibalizing Vento’s sale to an extent.


      Source

OEM Offtake Figures – November 2011

November 2011 Sales Figures

1) Positive Signs in the month of November. Labour Unrest seems to be settling for Maruti – hope the sales completely revive in Dec’11.
2) Etios Brothers (Etios+Liva) has boosted the growth for TKM. Made for India Etios has got TKM to an enviable position.
3) Someone forgot to tell Mahindra about the Recession in the Auto space. M&M has an excellent growth of around 53%.
4) Tata Motors revive sales with the growth in Nano Sales. Also the new Indica Vista has boosted the numbers for TML.
5) Figo again emerges saviour for brand Ford – what a winner it has proved for Ford in India!
6) GM tastes the power of Diesel. Has a marginal growth (just 1%) – all thanks to the new Beat Diesel.
7) With more than 1600 bookings for Rapid, we expect a more RAPID growth in sales figure of Skoda in December’11.
8) VW’s Polo & Vento has grown to a sustainable position and are bringing increasing numbers to VW portfolio.

Indian Automotive Brands & Segments

There was a time (1980s) when we had only two Indian Automotive brands – Padmini & Ambassador. The consumers had only two options and the estimate Annual Sales used to be around 20000 numbers. Maruti pitched in the year 1983 with its legendary Alto which challenged the monopoly of HM & Premier Automobiles. Post liberalization many foreign auto makers set shop in India. Fiat, Ford, Peugeot were the early entrants into the Indian market realizing its potential. Soon we saw an upsurge in demand and our home-grown Tata Motors jumped into the bandwagon. Within a short span of 25 years the number of OEM’s in the Indian market grew to 25! The market which was churning out 20000 numbers now grew to a level of more than 20 Lakh vehicle sales annually.

With demand grew competition, so did the complications. Customers were spoilt for choice! There were so many options in the market, that it had to be regularized. Hence, SIAM decided to divide it into SEGMENTS. It was primarily a division based on the length of the vehicle. The Segmentation as per SIAM (considering the length) and the Indian Brands in the segments is as follows –
1) Mini (A1) / A Segment
The stalwart segment which boats of the most popular brands such as Maruti 800 & Tata Nano. This segment had grew very fast in the initial years of expansion of Indian Automotive Industry. It started shrinking with the formation of new segments. It was recently revived with the entry of Tata’s Nano and has also triggered other OEMs to bring products in this table. Bajaj/Nissan/Renault JV is expected to bring another offering in this segment. All would depend on how Nano sales progresses.
Brands:

2) Compact Hatchback (A2) / B Segment

This is one of the fastest growing segments in India and accounts to more than 50% of Automotive Sales. This Segment has a never-ending number of brands lined up and the list keeps growing. The value-for-money, city friendly and practical qualities of products in this segment has made it the peoples favorite. We expect this segment to stabilize now and predict the dynamic growth of value for money sedans in the next few years. The Brands in this Segment are –
3) Midsize (A3) / C Segment
This segment also has many models today catering to a wide price bracket. It is classified into entry-level and premium ‘SEDAN’ categories. 2011 saw maximum launches in this space. This highlights the importance OEMs are giving to this segment and is bound to grow exponentially in near future. Models –
4) Executive (A4) / D Segment
Majority of the models in this segment were brought into the Indian market as CBU’s. As volumes increased, localization and price rationalization were the after effects. This Segment has become the obvious choice of successful professionals and stands as an attractive option between Sedans and Premium Saloons. The offerings in this segment are –
5) Premium (A5) / E Segment
The Luxury or the high end segment is the only segment which has shown signs of sustainable growth in past 2-3 years. This has attracted a lot of Premium Auto Manufacturers to explore Indian terrain and India has emerged as one of most important Strategic Markets for these OEMs.  
6) Luxury (A6) / F Segment 

The choice of CEO’s, Managing Directors and the ultra-luxurious chaffuer driven car – would be the right definition for the offerings in this space.

7) SUV / MPV / MUV


Considering the poor infrastructure and road conditions – this segment has been the most rational choice for all. This segment has always been the obvious choice for Rural masses and is still bound to grow further. With immense people carrying capacity, off-road capability, driven by diesel and with the ‘image’ factor attributed to it; it has grown leaps and bounds throughout. You’ll not be amazed to see the number of offerings in this segment –     
9) Convertible/Coupe/Supercars
This is an extension of E & F segments. With the advent of Ferrari, Bentley, Lamborghini, Porsche, etc in last few years the number of offerings have amplified. After the popularity of F1 and with the increasing number of billionaires in India, we are sure to see a much of these on Indian roads – 
The exhaustive list of Brands mentioned above are the right indicator of the Indian Automotive Growth story. But the million dollar question is – how many of the brands mentioned above are going to remain in the next few years. 
2011 also saw the demise of the iconic Fiat Palio. Auto makers need to understand the competitiveness of the Indian Market – and there is no room for failure! 

Shootout: Entry-level Luxury Bikes Segment, India

Indian 2 wheeler Market was the only rejoice in the ailing Indian Automobile Industry. While Industry experts believed that Hero Motor Corp would suffer after its divorce with its Japanese partner Honda, Hero proved all the analysts wrong by beating the market expectations. During the first half of the year Hero’s market share grew marginally to 73 percent from a market share of 70 percent last year. HMP also recorded its all time highest retails of 6.5 Lakh units in October 2011.
Now coming to the Luxury Performance Bike market in India, Hero again has been the first mover in this category. It launched Karizma way back in 2003 and can be easily crowned as India’s first ‘realistic’ superbike. It not only marked the entry of performance biking but also allowed Indian Bikers to elevate from the traditional 100cc/150cc category. But volumes were minimal, Indians weren’t ready to shell out the money just for the premium price tag and was meant unsuitable for the Indian roads.
But as our Infrastructure & Economy improved, the bike found many takers. Indian Bikers were slowly inclined towards much powerful and good-looking bikes. Larger and Meaner bikes found place in the garages of many Indian homes. Such was the craze that motivated much premium brands like Harley, Ducati, Hyosung, etc.. to set shops in Indian soil.
As we all know, Indians like to be ‘spoilt for choice’. Hence there was the launch of India’s first of its kind ‘super sport bike’ – Yamaha YZF R15. This 150 cc monster instantly won hearts over and became the face of Yamaha’s performance oriented culture. It also played a vital role in reviving Yamaha’s identity in the Indian terrain. This slowly turned out to be the crowned jewel in Yamaha’s stable. It re-defined the ways of Indian 2-wheeler enthusiasts thought about a performance bike. R15 set many benchmarks in terms of design, ride-quality, performance and overall appeal. It also proved to be a crowd puller in many of its showrooms which also improved the sales of its sister brands too.
And 2011 saw the competition heated up. Indian 2-wheeler space generated interest in Bike Manufacturers throughout the world and these manufacturers were pretty serious about the size the country had to offer. Honda’s R&D gave birth to a product that was specially designed and manufactured keeping developing countries into mind. The overall proportions of the new baby – CBR 250R never made it look like a 250cc segment bike. It put the elder siblings to shame. It was launched in early 2011 and garnered tremendous bookings in the Indian soil.
The sales numbers were as follows –
Although the overall size of the luxury bikes market accounts to around only 1% of the Industry; it is bound to grow exponentially . This is evident from the fact that Honda sold more than 11000 of CBR 250R just within 6 months of its launch – even though there were major supply issues after the Japan earthquake. And the recent upgrade of the Yamaha R15 (version 2.0) clearly signifies the seriousness of the manufacturers in this space. Even Bajaj is planning for a 250cc Pulsar anytime soon in early 2012. Also Suzuki would be launching a 250cc bike in the same space. 

Keep looking for much activity in this segment. This is obviously the most sought after space in the Indian market now (not for generating volumes, but for creating the brand for the manufacturer).

2011 – A year of Launches

Year 2011 will be always be remembered as the most crucial year in Indian Automobile Industry. It experienced the launch of segment-defining products and changed the overall perspective of the industry. No one had shaken Honda’s dominance in C-segment till date. Suddenly Fortuner fears its dominant as the most sought after Premium-SUV position is at stake. Alto slowly seems to ‘let it go’ and out of the blue entry-level car segment isn’t all that “entry-level”; we have an offering that oozes a lot more style/premium-ness than its costlier competitors.

A brief line up of the launches in 2011

  1. Hyundai’s all new fluidic design philosophy was showcased by the launch of New Fluidic Verna. With the right pricing, attractive design and striking diesel variant, it overtook Honda’s indomitable City within months of its launch
  2. Mahindra’s target to become an aspirational brand was strengthened with a giant “Cheetah” leap – XUV 500. The XUV ‘five double ohh’ not only re-defined Mahindra’s engineering process but also welcomed to the league of PREMIUM car makers. This surely has provided M&M a strong foundation before the launch of its international brands in lieu with Ssangyong.
  3. We were all anticipating a worthy competitor to the King of entry-level hatchs. Hyundai’s codenamed HA was one of the most awaited launch of the year. The product was launched as EON. The fluidic design philosophy was carried over by Verna and the breakthrough pricing has made it all more luscious. 
  4. Ford after its success of Figo, wanted to replicate the same with its sedan offering – Kinetic Fiesta. The Fiesta had already tasted success internationally and the extrovert Kinetic design was a sure eye-turner. But the product couldn’t really make a dent in Indian Scenario due to over-the-box pricing and cramped interior space. 
  5. Maruti’s second generation Swift had a Blockbuster launch. The longer and roomier swift has garnered over a lakh bookings till date. But the labor unrest at the plan disturbed the deliveries and has left a majority of its customers waiting for it.   
  6. Renault launched two of its premium offering – Fluence and Koleos. While both the products couldn’t bring numbers to the auto maker; Renault surely wants to build its image as a Premium Car Manufacturer. 
  7. Nissan’s Micra and Sunny proved to be instant successes. Even with its petite dealer network it has amassed an average of more than 1000 numbers for Micra and Sunny. As its network expands, we can expect more numbers and newer product launches.
  8. VW wants the top OEM slot internationally by 2018. India as a market plays a very vital role for VW for turning its vision to reality. Hence it has been very aggressive in its strategies in the sub-continent. Be it dynamic network expansion, break-through marketing or slew of launches – VW is trying all means to gain the market/mind share. This year Vento allowed VW to establish itself as a serious competition in the lucrative C-segment. Even the new Passat marginally increased the numbers and stood a threat to its sister brand Superb.
  9. Skoda is leaving no stone unturned to churn numbers in Indian Market. It has learnt from its mistakes and have implemented its learnings this year – a price cut was seen in its hatch-offering ‘Fabia’. Also the Octavia-replacement ‘Rapid‘ is expected to be priced competitively. With its mini-limousine type space and the Skoda badge, we expect the Rapid to heat up the competition in the C-segment.
  10. The Firodia’s led company launched the Force-One. The premium SUV has the design cues from the Chinese Guangdong Foday and the Benz-engine had high hopes from the product. But again the value-conscious Indian market couldn’t see value in the offering and the mass-mover brand image of Force acted as hurdles in its way to establish Force One as a Premium SUV.     
  11. Toyota’s ambitious ‘Made for India’ products Etios and Liva was also made public this year. Toyota’s expansion plans in India is backed by these two products. Toyota has almost grown more than 50 percent this year. Although both the Etios & Liva are bringing numbers to the Japanese car maker; but in sight to get the prices down the quality has degraded as well.  
  12. Honda’s new hatch ‘Brio‘ has a lot of expectations riding on it. With a competitive price and cute looks it has already harvested more than 5000 bookings.  
There were also some very exciting launches in the Luxury Car space. My personal favorite was the Indian launch of Range Rover Evoque. I believe there would be no other car in the world that would be as similar as its prototype/concept model. 
We expect the trend of launches to continue in 2012. Around more than 50 launches are planned this year. The Snapshot is as mentioned below –
Indian Car Launches – 2012

Analysis of the Indian Automobile Debacle

Everyone is discussing the downward trend of the Indian Automobile market. While India is in the hotlist of all the top OEM’s of the world; the recent downfall in the sales chart has raised a lot of questions on the lucrativeness of the market. The volatile trend is not a good sign. Analysts believe that the trend is to continue for another 3-4 months without any signs of revival. This has made the investors wary and the manufacturers scared. This amidst the fears have forced the OEM’s to announce heavy discounts in November and I’m sure the same will continue for December.

The most attributed reasons for the downfall are:
          *Rise in Interest rates
          *Increase in fuel prices
          *Inflation
          *And Labor Agitation in the biggest Automaker

The bad times even got worse with the last point mentioned in the above list. Maruti Suzuki is reeling to supply the vehicles according to demand and the labor issues in past 3 months have hit the production hard and has turned out to be the worst nightmare in MS’s history. This had a direct impact on the company’s sale and was even reflected in its Q2 results – the company saw a fall of almost 59.8% in its profit. MS used to be the mascot of the Robust Indian Auto Industry and its decline in profits raised many eyeballs. Even though with an exhaustive booking list for its new Swift (almost a lakh booking), the signs from MS aren’t too upbeat.
October 2011 Passenger Car Sales Figure – OEM wise
India’s two biggest Automobile manufacturers MS & Hyundai experienced a de-growth of more than 52% and 5% respectively. Although the reasons for the de-growth in MS was explicit; Hyundai’s downfall was worrisome even after the launch of its much awaited Eon. The industry was expecting a boost in Hyundai’s sales chart after Eon’s arrival. 
While the growth of VW, Toyota, Ford and M&M was a sigh of relief for the industry. With festivities around these OEM’s performed as they were expected to do. The growth was primarily pushed by the introduction of new products in their stable – Polo & Vento for VW, Etios & Liva for Toyota, Figo for Ford and XUV 500 for M&M. We’re sure with the all new Brio and the re-worked Jazz will do similar wonders for Honda in coming days.   
But, the recent increase in petrol prices have again fueled the discussion on how is it going to affect the industry. And to fuel the fire, the increase in Repo rates from the RBI will also hike the already soaring interest rates. 
To explain on how these factors are going to affect the common man let us take an example of the following scenario –
From the above table the following points could be inferred –
  1. The product price (Maruti Alto) has rose a decent 2% which is acceptable.
  2. The EMI has increased by a marginal 10%. The loan rates which used to be once lucrative has now made the common man think twice before finalizing his/her purchase decision. And with the volatility of the interest rates; it has pushed many consumers postpone their purchase.
  3. A whopping 70% increase in the price of the Petrol. It is difficult to digest the fact that fuel prices have hiked unprecedentedly over just a short time of two years. As the petrol prices have been de-regulated by the government – we would not be surprised to see the petrol price touch the century mark in a nearby time.
  4. Considering all the above factors, the total cost of ownership has increased by a considerable 22%. 

We at Management Punditz do not understand on Why does the government do not think about the Auto Sector and the people associated with it and is just concerned about the Oil Companies??? We’re sure that the losses beared by the economy as a whole is greater than the losses of the Oil majors. We hope government realizes the truth pretty soon.

Trend – Diesel Price (Rs/Litre)
However to exhibit the sudden upsurge in demand for diesel cars is due to the sustained increase in prices of the diesel and the long term benefit associated along with it. Today the performance and refinement between a petrol and a diesel car is surprisingly similar. Even the maintenance costs of a diesel machine has rationalized over the period of time. This makes Diesel Cars a sensible buy for the consumers. A perfect example to describe this – Out of a lakh bookings for the new Maruti Swift; 80 percent of the customers have opted for a diesel variant.
We hope that the recessionary trend in the Indian Auto Sector is short lived and as with the array of new launches, we see the sure-shot signs of revival.        

Indian Car Sales Figures – October 2011

October 2011 Sales Figures – Pan India
Highlights:
·         Fortuner sales lowest in past 5 months – 763
·         Bolero – away from the recessionary trend clocks above 8000 numbers
·         Alto in its worst phase – once ruled the segment with more than 33k numbers has dropped to 15k
·         Sunny sees a brighter side – the value for money sedaaan from Nissan does impressive 1340
·         Chevrolet BEATs the heat with a successful more than 5k figure with its diesel offering (for Beat)
·         Verna stands tall as the king of C segment – again overtakes the Honda in its own game – does 4217 numbers
·         Etios proves to be a growth booster to Toyota – along with Liva gains 5851 figure
·         Micra clocks it’s all time highest 1619
·         Eon does a modest figure of 6315 and already is 8th in Top 10 selling cars of the month.
·         Brio does 1220. Honda is already busy with 6000 bookings of Brio and is reeling with components issue (due to flood in its parts/component base Thailand)
·         Sumo and Indica has their best offtake number in last 6 months – 2109 & 10812 respectively.



Mahindra’s Blue Ocean Strategy

In a recent interview Mr. Anand Mahindra made a remarkable statement – “We will create a system that is impregnable”. The same could be highlighted from Mahindra’s current position – it is the only company in the world to enjoy its presence in all mean of transportation, i.e. ‘Air’, ‘Land’ & ‘Water’. According to Mr. Mahindra the most defensible strategy is to do multiple things and the combination of those multiple things becomes very hard for a competitor to emulate.

Air:

Recently Mahindra Aerospace & Government’s National Aerospace Laboratories announced the successful maiden flight of their jointly developed C-NM5 aircraft, marking an important milestone in their collaborative aircraft development programme.
This is the first step of Mahindra Aerospace’s dream “To do something potent in the regional aerospace – similar to what has been achieved in Rural Transport“. This is backed by acquisition of Gipps Aero and Aerostaff in 2010. Both the Australia based companies were involved in manufacturing small aircrafts and thus suited Mahindra’s vision to achieve ‘economical air transportation around the world‘.
The group is now also seen as the Indian Embraer! Anand Mahindra believes Indians would take to the skies if flying became affordable and Mahindra Aerospace will do everything to realize this dream. The dream of “Giving Wings!”

Water:

The company’s vision is to lead the development of India’s waterways and grow the marine recreation industry by offering customers an experience they will cherish. This further fuels Mahindra’s ideology of having a presence in almost every segment of the transport ecosystem.

Land:

Mahindra & Mahindra (M&M) manufactures utility vehicles (UVs), tractors, commercial vehicles (CVs), three-wheelers and gensets. It is India’s market leader in UVs and tractors. M&M, through its joint ventures
with Navistar, manufactures and markets medium and heavy CVs in India.
In land, Mahindra has dominant share in all its segments –
Source: SIAM, Company Data, Credit Suisse estimates

Mahindra earns a competitive advantage via a combination of a tractor and UV business in rural India. Both its UV and tractor businesses face very little competition and given that people earn their livelihood through most of their vehicles, its sales are less discretionary in nature. And Scorpio has proven to be a game-changer for the company and has help it transform its image from a people-mover to luxury SUV manufacturer. It has also become the group’s flagship for expansion into new market. 
One in two tractors bought today in India is badged M&M after the acquisition of Punjab Tractors. Two joint ventures in China, one with Jiangling and the other with Yueda Yancheng, has made it biggest tractor maker in the world in terms of volumes!
Also the acquisitions of Reva & Ssangyong has strengthened its dream.
All this was keenly observed by famous strategist and thinker Mr. C K Prahlad and named the whole milieu as “FORTRESS MAHINDRA”. Fortress Mahindra means that if you go into a certain mobility business where you can share procurement, where you can share research and development synergies, where you can share logistics, where you can share brand, you can share channel and then create a mobility web where it becomes easier to enter a mobility business that somebody else can’t and easier to defend when somebody tries to emulate. 
And as the historic moment of the launch of its most-awaited XUV 500 arrives, we’re sure that with this product M&M is sure of achieving its international dreams. We would like to end this post with wishing M&M all the best for XUV 500.
Reference: Business Today