BOMBAY, 2 September — There is a major shakeout happening in the ever changing dynamic Indian automobile industry. New leaders are emerging, forcing the old stalwarts to once again dorn their thinking caps and try to stay ahead in the race. For some, the issue is not staying ahead in the race, it is rather staying in the race. The passenger car market in the country is undergoing a transformation with competition expected to be intense.
Perhaps, the most dramatic growth of over 9 percent has come from B segment cars. Against sales of 1,66,093 between January and July 2001, the number has climbed to an impressive 1,81,517 units this year.
The race is led by Santro from the Hyundai fold, followed closely by Tata Indica at 43,084. Interestingly, while the Tata car has been the top seller in June (7,053) and July (8,528), the steady performance of the Korean compact brand through the first seven months of this year has enabled it to stay ahead of the pack. However, Indica has grown tremendously compared to its sales in June/July last year. The Maruti brand does not have much to cheer, except from the performance of the Wagon R which has staged a smart recovery, moving up by about 23 percent. Though its Zen, continues to remain the highest selling car in the B segment, it too has fallen by 6 percent from 39,826 units last year to 37,427 in 2002. Alto has fared the worst, with sales crashing by nearly 33 percent.
The C segment has grown by over 4 percent helped by strong performances of the Hyundai Accent, Ford Ikon and Ambassador. Accent sales were up 18 percent, followed by the Ikon which has actually seen a 5 percent fall in sales and the old war horse, Ambassador, has also experienced a 7 percent downward swing during these seven months.
On the other hand, sales of Fiat Siena and Weekend have more than doubled. The Opel Astra also suffered reverses, down 29 percent. from 1,330 to 940 units this year. The trendier looking Corsa and Swing, however, checked the drop in Opel sales by registering a nearly 34 percent growth. Another winner among the mid-size sedans has been the Honda City, moving up by 22 percent till July.
There is a general perception in the market that the Maruti 800 which has ruled the roost for more than two decades is on its way out, and that Maruti itself would like to replace it with the 800 cc version of the trendier Alto as the entry-level car. And that is probably why, in an attempt to push up sales Maruti Udyog recently dropped prices of the 800. But competitors are undaunted as they feel that the Indian car markets have become more mature now and the consumer preference has undergone a change wherein he no longer looks at the Maruti 800 as his entry-level car. Customers today have become more discerning and are increasingly choosing higher prices cars as their first car.
According to industry sources, the passenger car market grew by just 0.6 percent in the first half of 2002 over the same period last year. In this, the share of the A segment — now exclusively made up of the Maruti 800 — dropped to 24.4 percent from 30.3 percent, while the B segment — made up of the Zen, Alto, and the Wagon R, all from Maruti Udyog; Santro from Hyundai; Indica from Telco; Matiz from Daewoo, and the Palio at the upper end of the segment from Fiat India, went up to 56.3 percent against 52.4 percent earlier.
Analysts say that all the activity will now concentrate in the B segment. Infact the trend seen is that consumers would rather go in for used B segment car in good condition which is now available for the price of an A segment car or slightly higher than that. While the overall growth in the passenger car market may be just about 10 percent, the B segment is expected to drive the growth in the industry.
And this is precisely the reason why there are so many new cars in the B segment which are either launched or being readied for a grand launch in the coming months. Maruti is expected to launch the Suzuki Ignis, while the Liana is also slated to come in later.
Ford India is expected to bring in the Ford Fusion, a product that is scheduled for launch in Europe later this year. Ford India’s Ikon is doing quite well and at the beginning of this year, it launched the internationally acclaimed Ford Mondeo, which has met with a good response.
Hyundai Motor India, the second largest car manufacturer in the country, has been aggressive in both introducing products and its pricing strategy. After the recently introduced 1.1 liter version of the Santro, Hyundai will shortly launch a five-door Accent, followed by an automatic transmission version of the Santro, a CRDI fitted diesel Accent, and a multi purpose vehicle, probably the Carens. Hyundai is believed to be toying with the idea of bringing the Getz, which will be pitted against the Palio, a car that has helped Fiat India carve a niche for itself in the upper-B segment.
General Motors India plans to introduce at least five vehicles before December 2003 which includes the Vectra, the Zafira compact van, a vehicle under the Subaru label, a new passenger car probably from the Daewoo stable, and the Panther utility from Isuzu. There is also talk that GM might relaunch the Matiz and bring in the Nubira, a mid-size sedan from Daewoo. Apart from this, GM India is also looking to revamp all its dealerships and are to renamed as GM AutoWorld.
Fiat India has also been doing brisk business. It recorded a 20 percent sales growth over the January-March quarter. Its premium small car, Palio is doing very well and its other vehicle Sienna is doing OK. Palio Adventure and Uno continue to remain in business.
Auto major, Tata Engineering has drawn up a busy schedule with a slew of launches lined up over the next few months. While a sporty version of Indica Sport is slated for launch by the end of 2002, a station wagon, Tata Estate is likely to be launched in March 2003. In addition, it is also planning variants of both Safari and Sumo during the later part of this year. The launch of the Sedan is scheduled to happen any time now and it will mark Telco’s entry into the “C” segment cars in the Rs.500,000-Rs.700,000 price range.