Indian market has evolved unexpectedly and OEMs are finding it difficult to plan their product portfolio citing the change in consumer mindset and difficulty in identifying the trends. We had coined the term ‘UV’ology in 2012 seeing the impressive growth of the segment and the influx of new models to cash in the phenomena (say Ertiga, Duster, Ecosport XUV etc). However, the trend slowed down in the UV’s and Indian consumers focus shifted to other segments.
The reason the Premium Hatchback segment is being analyzed is:
– It is one of the fastest growing segment in 2015: The segment grew astounding 276% in year 2015 v/s 2009. Also the growth was 96% in 2015 when compared to 2014.
– The Big 3 of the Indian Automotive Space (Maruti, Hyundai & Honda) now have a competitive product in the segment and will define their growth prospective ahead.
– Percentage contribution of these models to their respective OEMs – Ex: i20 Elite+Active contributes to over 28% of Hyundai’s sales in India! The story is similar for Jazz as well where the model currently forms over 25% of Honda’s sales.
A look at the sales volumes of the cars in the segment in past 7 years:
Hyundai i20 remains the undisputed leader in the segment and in a way has defined the segment itself. Many players jumped into the premium hatch space, but were unable to catch the fancy of the Indian Buyer – Jazz & Punto saw initial positive response, however couldn’t gain the expected volumes. While the previous generation Jazz was discontinued in July 2013, even Punto faced issues crossing the >500 sales mark.
Snapshot of major updates in the segment:
* Hyundai was the first automobile company to crack the segment and have the first successful product in the category. i20 set up new benchmark in sales over years and the current generation clocked over 1.5 Lakh unit sales in just 14 months (since its launch in Sep’14)
* Hyundai was again a pioneer in the segment – It had launched Getz way back in 2004 and had to stop its production owing to poor sales in 2010 (it was refreshed as Getz Prime in 2007). The response for Getz wasn’t encouraging – however, it did not stop Hyundai to explore and launch first gen i20 in 2008 which proved to be an excellent decision and elevate Hyundai into the premium category. Even biggies like Honda were not able to make any effect with previous Jazz in the segment.
* Honda understood that it had lost a valuable pie in the premium hatch category due to hefty pricing of Jazz, which otherwise would have helped the Japanese major to gain volumes in the tough times (2009-2012). However, Honda realized its mistake and bought in the new Jazz with diesel engine option and announced an aggressive price with it. The car has seen assuring response and looks forward to grow even stronger in coming days.
Polo remains VW’s most successful product in its portfolio which highlights the response of the segment’s customer. Though the sales of Polo has varied over years, VW recognizes that a fresh update can renew sales to newer heights.
* Maruti too realized that the Indian customer would slowly shift its preference towards the premium hatch because of –
> Ease of maneuverability of hatches in crowded cities
> Youth wants a compact, spacious and stylish car – all boxes ticked by a premium hatch
> The current buyer wants a feature rich car and wouldn’t mind paying a premium for the same
* The aforementioned reasons made India’s no.1 carmaker to enter the segment with its latest offering Baleno and also market it through a new channel – Nexa to deliver the premium message with the offering.
We expect the segment to deliver similar growth in coming time and do not be surprised to see other OEMs jump in this bandwagon. Baleno & Jazz again have a lot riding on their shoulders to define their respective OEMs performance in India.