AUTO PUNDITZ

Analysis of Top 30 Selling Cars in India for H1 2022

Maruti Wagon-R continues to be the best-selling passenger vehicle in India. Twin Tata products - Nexon and Punch - made it to the top 10 list. 18 of the top 30 products were having some form of discounts throughout H1-2022.


Prelude: Understanding Product-life-cycle (PLC)

In the automotive industry, each generation of product has two distinct phases in the product-life-cycle (PLC). Phase one starts with a new generation launch based on a completely new platform or modified existing platform or same platform with different body shell, followed by successive model year (MY) changes - mostly limited to feature upgrades to keep up with consumer’s expectation and continuously defend territory from competition. Phase two starts with facelift (FL), again followed by successive MY changes. Extent and depth of FL and feature update depends on the company’s vision and past performance of the product in the competitive landscape. Ideal PLC timeline in India is 3+3, i.e facelift after 3 years of launch and generation change after next 3 years. Usually a single platform supports two generations of product, and varies widely based on the manufacturer’s platform development strategy. MUVs typically have long PLC due to their utilitarian aspect.


Discount or sales promotion is a tactical approach to meet value perception of the target customer segment. As products age during the product-life-cycle, it may need higher discount provision in business case to counter competitive challenges which change from time to time. Hence incremental discount with product aging is always provisioned in PLC business case. So, the products selling with the least or no discount deliver better value to the customer and in turn create more value for the manufacturer’s investors. However, if products fall short of customer segment expectation, there will be a call for higher discount to lower transactional price and match customer value expectation and push product out of the showroom, thus eroding profit margin, worsening business case and in extreme case, discontinuation of product from market.


Discount is also used as a tool to support sales in declining product segments or adverse market situations to support volume to cover fixed costs. Extent of discount will again depend on product’s inherent strength and weakness.

360⁰ Performance evaluation

Based on these key parameter of PLC, we came up with a comprehensive 360⁰ evaluation method, which takes into account several key aspects to know the correct health of the product in competitive landscape.

  • PLC timeline : Longer PLC usually means higher discounts in later phase, successful products are exception

  • Discounts on offer : Manufacturer/dealer sales push indicator

  • Market share growth : Acceptance among customer segment

  • Volume growth : This need to be seen in tandem with discount

  • Waiting list : Proxy for quality of demand generation


Rating system: best first

  1. Outstanding: Exceptional performer

  2. Good

  3. Average

  4. Below Average

Analysis

  • Top-10 list is still dominated by Maruti’s products, followed by Tata, now with two products and Hyundai is left with only one product

  • SUV/MUV/Crossover are now taking over higher ranks away from hatchbacks and sedans

  • Except for Renault Triber and Maruti Ecco, all other MUVs in the list (Maruti Ertiga, XL6, KIA Carens and Toyota Innova) are doing quite great, as there are no discounts and order backlog is also good

  • CNG has a kind of supercharged performance of some products as they are selling without discounts with a long waiting list – Maruti Wagon R, Ertiga, Dzire and Tata Tigor.

Maruti

  • Wagon-R with twin engine and bi-fuel option continues with the tag of best-selling PV in India. This is largely driven by CNG options that contribute 46% of sales and have a good order backlog. However, on the downside, petrol variant is selling at a huge discount in H1-2022

  • All Maruti products on sale carries discounts in H1-2022, except for – CNG variants of all products, XL6, Baleno & Ertiga

  • Maruti Celerio is struggling as the new generation is available with huge discount within a few months of launch

  • Maruti Alto too has lost sheen due to shift in market preference


Hyundai-Kia

  • Despite low sales due to chip shortage in H1-2022, Hyundai Creta is the best performing product here. Even in third year of PLC, product is selling like hot cake, without any discount whatsoever, in highly contested segment, still with long waiting list

  • Other products from Hyundai-Kia that enjoys similar performance are – Hyundai Venue, Kia Sonet and Kia Seltos

  • Availability of BS6 compliant diesel engine is also a key driver of Hyundai-Kia SUV/Crossover products in India

  • i10 and i20 slipped out of top 10 category and are available with discount for several variants


Tata Motors

  • Post facelift in 2020, Tata Nexon has shown phenomenal growth in successive years with feature addition. BEV variants introduced around the same time now contribute 15% of volume and that came on top of the existing volume. So facelift is crucial phase to change the tide, and thoughtful diversification of drivetrain is the need of the hour

  • Punch too is following the successful foot step of Nexon, and made it to top 10 tally by creating a whole new micro-SUV/Crossover category, having currently all to itself

  • CNG and updated battery and motor of EV version has given new lease of life to otherwise languishing Tata Tigor


Mahindra

  • Mahindra’s XUV 700 and Thar are doing exceptionally well, whereas XUV300 launched around the same time as Hyundai Venue is desperately waiting for a comprehensive facelift and has the highest discount on offer in the list

  • Bolero and Scorpio - workhorse from Mahindra’s stable – seems to be having routine success in an uncontested market territory

Toyota

  • Innova - lone product from Toyota in this list is back on track without any discount and remain uncontested so far