Toyota to change its ‘Fortune’r!

Toyota has officially announced the launch of the ‘next-gen’ Fortuner on 7th Nov 2016. Fortuner has undoubtedly been the most successful flagship model for Toyota and we have huge expectations from the upcoming model. Recently it has been challenged by Ford’s Endeavour and did lose the top slot of the segment to Ford. The lower numbers of Fortuner was also attributed by Toyota’s plan to reduce its own and dealer inventory.

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The next-gen Toyota Fortuner is based on the new the ‘Toyota New Generation Architecture’ (TNGA) platform, which also underpins the new Innova Crysta. Toyota claims that the SUV is lighter and stiffer and promises improved ride quality, handling, and safety. In terms of looks, the new Fortuner comes with a host of design and cosmetic changes – It’s sleeker and looks much agile.

Fortuner has always been a ‘HOT’ seller for Toyota and was no product could ever-emulate its success since the launch. Even Endeavour currently is far behind the volumes that Fortuner had gained in its best times. In 2013, Fortuner garnered ~1,500 units/month! The volumes for a >Rs.25 Lakhs costing product was humongous and made the competition look lame. The butch looking SUV made a niche for itself and contributed significantly to Toyota’s & Dealer’s overall profitability. Fortuner’s dispatches to dealers started since Aug’09 and has sold over 96k units till date! Let’s look at its sales journey over years –

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With Toyota’s timeless quality and reliability factoring in with the New Fortuner – we expect the upcoming model to help regain its ‘Fortune’ and move the model to the Top Slot in the segment again.

Automotive Industry Trends

We read an interesting article on Economic Times with a similar topic and thought of presenting Auto Punditz’s view on the same. See what ET had identified as the Key Emerging Trends in the Indian Automotive Industry:

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We agree to the trends highlighted by ET; however we would want to rank it differently and is as follows:

  1. Word of ‘Digital’ – Though ‘Word of Mouth’ is still an important decision making criteria for the car buyer; Researching on Online Media has become an extremely influential tool prior to buying a New/Used car. We thus derive the term – Word of Digital to signify the impact Digital Media is making for a new buyer. Several comparison & review sites have blossomed in past few years and are seeing strong readership growth – No wonder 75% of buyers are Researching online in these sites before buying a new car.
  2. Petrol Resurgence – We had presented a statistical analysis on the subject a few days back and believe that Petrol models are the future and are going to dominate a much larger pie in overall sales. The Market Leader – 69% of Maruti Suzuki sales is currently contributed by Petrol models! Model-wise numbers is as shown – 4
  3. ‘UV’ology – The segment has grown a whopping 98% YoY; whereas the overall Auto Industry grew 11%. Significant volumes were added from the offerings of two biggest OEMs of the subcontinent – Maruti (Brezza) & Hyundai (Creta). Surprising is Brezza’s volumes with only Diesel offering as of now! See how the segment has grown –1 UV’s are leading the way for the double digit growth posted by the industry  and has proved to be extremely crucial in the volumes spur.
  4. Drive Automatic – AMT, CVT, Torque Converters and DSGs are collectively changing the way Indian’s are travelling! Don’t believe us? Than this fact will blow your mind – 57% of overall Skoda Rapid’s sales came from AT variants in Sep’16! Also a staggering 21% of overall Honda India’s Sep’16 sales was from their Automatic variants in the portfolio! Worsening traffic conditions in the subcontinent and more members of the family driving the car (ease of driving) are the primary factors for the increase in Automatic’s sales.
  5. ‘She’ is the man! –  Women today account for upto 12% of overall car sales, twice as much as five years ago. Not only that, the female of the household are emerging as the key influencer(s) in the purchase. Don’t be surprised that a car buyer prospect is not buying a car because his wife/girlfriend/mother does not like the brand/color/shape of the car! With increasing influence of Women power; automatics sales have also seen a hike. And so is the sales of Compact SUV’s seen an increment.
  6. Which Car? – Any segment should do! – Car buyers are not hesitating to explore higher segments (if value is sought). Ex: A friend of mine planned to buy an Alto, and ended up buying a Dzire instead. Seeking long term-value, consumers these days are ready to upgrade to higher segments and not keeping themselves restricted to a particular segment. Word of Digital is also proving critical these days, where buyers are influenced to buy other segment brands/cars.
  7. Power of ‘FINANCING’ -While entry level car buyers are inherently budget conscious, buyers up the segments are ready to flex the purchase cost. That’s the reason the tagged costly cars (like i20, Creta, Innova, City, etc) are doing exceptionally well in India. The reason being ease of ‘Financing’ – one would need to pay a meager Rs.2100/mth additional for extra per lakh financing. For Example: If a customer decides to buy a Hyundai Creta instead a Maruti Ciaz (and assume that the price difference is Rs.3 Lakh) – he/she will end up paying an additional Rs.6,300/month additional in the EMI than the planned EMI for Ecosport (considering a 5 year loan and interest of 9.5%). Aggressive promotion of pre-approved loans and other depreciation benefits also end up supporting a new car sale.