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Highlights
Maruti Wagon-R continues to be the best-selling passenger vehicle in India.
Tata Nexon is the best-selling SUV/crossover, followed by Hyundai Creta.
4 SUVs/Crossover occupy the top 10 ranking, followed by 4 hatchbacks and only one sedan and MUV.
The top 30 products command 83% of the PV market share.
17 of the top 30 products were having some form of discount throughout 2023.
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 the same platform with a 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 the competition. Phase two starts with a facelift (FL), again followed by successive MY changes. The extent and depth of FL and feature update depends on the company’s vision and past performance of the product in the competitive landscape. The Ideal PLC timeline in India is 3+3, i.e. facelift after 3 years of launch and generation change after the next 3 years. Usually, a single platform supports two generations of products 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 the 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 the later phase, successful products are an exception
Discounts on offer: Manufacturer/dealer sales push indicator
Market share growth: Acceptance among customer segment
Volume growth: This needs 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
The top-10 list is still dominated by Maruti’s products, followed by Tata, now with two products, and Hyundai, with only one product.
SUVs, MUVs, and crossovers are now taking over the top ranks from hatchbacks and sedans.
High CNG prices have adversely affected sales of some products from Maruti, Hyundai, and Tata.
Maruti
The Wagon-R, with its twin engine and bi-fuel option, continues to carry the tag of the best-selling PV in India. Sales of the CNG version were low due to higher CNG prices, and all variants were selling at a discount in 2023.
All Maruti products on sale carry discounts in 2023, except for the new Brezza, Vitara, XL6, and Ertiga.
Entry-level products from Maruti are struggling due to a lack of demand.
Hyundai-Kia
The Hyundai Creta is the best-performing product here. Even in the fourth year of PLC, the product is selling like hotcakes without any discount whatsoever in a highly contested segment.
Kia Carens has gotten very good acceptance in the Indian market.
The availability of BS6-RDE compliant diesel engines is also a key driver of Hyundai-Kia SUV/crossover products in India.
The i10 and i20 slipped out of the top 10 category and are available with discounts for several variants.
Tata Motors
Post-facelift in 2020, Tata Nexon has shown phenomenal growth in successive years with feature additions. BEV mix dropped to 12% as Tata has shifted production capacity to Tiago.
Punch too is following in the successful footsteps of Nexon and has made it to the top 10 tally by creating a whole new micro-SUV/Crossover category, which is currently all to itself.
The BEV version has given a new lease of life to the otherwise languishing Tata Tiago.
Mahindra
Mahindra’s diesel Thar, XUV 700, and Scorpio-N are doing exceptionally well, however, petrol variants of Thar is now available with some discounts.
Toyota
The Innova, the lone product from Toyota on this list, is back on track without any discount and has remained uncontested so far with diesel (43%) and strong-hybrid (47%) drivetrain offering.