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Tata, Mahindra and Skoda gained significant market share with onslaught of new products. Maruti and Hyundai lost significant market share. Top-3 brands command 70% of Indian passenger vehicle market share.
Manufacturer analysis
Tata Motors, Mahindra and Skoda gained significant market share and also posted their best ever H1 sales figures
Tata Motors registered highest volume growth of over 1 lakh cars
Tata Motors is just 14,782 units short for No. 2 position in H1 2022
Maruti and Hyundai has lost significant market share
Indian passenger vehicle market share distribution
Indian PV market is highly skewed in favor of only few top volume brands
Top 3 brands command 70% of Indian PV market share
Top 6 brands command 89% of Indian PV market share
This leaves other 9 brands with mere 11% market share
With right entry strategy Kia captured 7% market share in just 3 years of operation
Indian market could be challenging to crack but it is not unfathomable as proved by Kia
Top 6 Manufacturers - Deep dive analysis
1. Maruti Suzuki
In COVID-19 recovery phase, Maruti has settled down to a new normal with lower volume and market share. Primarily there are two reasons for this fate.
Reason 1 – Gap in product portfolio
Maruti is strong in the entry level sedan and hatchback segment and both have seen decline in demand in the recent past and that reflects in Maruti’s 2018 vs 2022 data. Moreover, except for diesel Brezza, Maruti never had a right SUV/Crossover portfolio. Shift in market preference for different body styles has caught Maruti off-guard and results became more pronounced in 2021 and 2022 sales figures.
Reason 2 – Discontinuation of diesel engine in BS6 era
With FCA sourced 1.25L diesel engine, Maruti was doing exceptionally well in the BS4 era with over 4.5 lakhs diesel vehicle sales. However, absence of a diesel engine has cost Maruti dearly in the BS6 era when Hyundai-KIA did have a good diesel engine for the UV range of products. Maruti tried to substitute it with the CNG option, but CNG as a choice of fuel, also had some limitations.
Since new product introduction will take time, Maruti has resorted to discounts on entry level products to arrest further downfall in market share. This started reflecting in a drop in financial performance of the Maruti Suzuki India Limited (MSIL) which is listed on the Indian stock market.
Now with a new partnership with Toyota, Maruti is trying to make full-hybrid technology, gained from Toyota’s library, a replacement for diesel engines. With good fuel efficiency and torque, petrol hybrid technology has similar advantage of diesel, provided it is priced in the same ballpark. Moreover, this will give them a 2% pricing advantage, as hybrids attract 43% GST and 1.5L diesel mid-size SUV/crossovers attract a minimum 45% GST. Pricing of new products with new technology will decide the future growth of Maruti in India.
2. Hyundai India
Hyundai did achieve a full V-shaped recovery in 2021. However, Hyundai lost some volume in 2022 - as Santro was discontinued and recently launched Alcazar could not achieve required market traction.
Major cause of market share erosion is the drop in hatchback volume since 2016. Though Hyundai successfully diversified SUV/Crossover portfolio to have high margin products, but it was not good enough to arrest overall market share fall. Alcazar too has lost traction in the fast growing segment thus limiting the expansion scope.
3. Tata Motors
Tata Motors witnessed phenomenal turnaround with new products onslaught and achieved record breaking sales in H1-2022. It is commendable that Tata Motors made occupant safety a new attribute in the mass-market, otherwise a neglected aspect in India.
Growth of Tata is driven by SUV/Crossover segment and addition BEV brought incremental sales. Like most other manufacturers, Tata too had a drop in hatchback sales. Sedan (Tigor) sales were catapulted by addition of CNG and improved BEV drivetrain.
4. Mahindra & Mahindra (M&M)
Mahindra’s recovery was aided by blockbuster launch of Thar followed by XUV 700 and helped Mahindra to surpass past sales record. Market share improved, however, it is yet to claw back to past glory of 2013. But then Mahindra is selling relatively high value UV’s thus generating higher revenue per product line.
5. Kia India
With three highly successful new product launches in India, Kia India has achieved what nobody else could in such a short span in the recent past. Kia has secured a significant 7% market share and the fight for No. 4 position is still on between Kia and Mahindra. Kia has got product (attributes which customer segment actually value) and pricing right from very first day, and that scripted successful innings for Kia in India, except for Carnival MPV.
KIA case study also proves that many other manufacturers who complained in the past about everything including Indian customer’s taste for their small market share or exit, need to know that their product strategy or execution was flawed and not the other way round.
6. Toyota India
Toyota’s V-shaped recovery is exactly over in 2022, however, sales remained at 2018 level and not the best year (2012).
As a part of partnership, Toyota is now selling a good number of Maruti’s rebadged products from its own showroom. It is a win-win situation for Maruti and Toyota as the later got its showroom filled with high volume products and the former got incremental customers for its existing products.