Just What the car buyer ordered

The Indian car marketplace is attempting to redefine the age-old business adage ‘Customer is King’, and in doing so, will continue to surprise patrons with a rush of automobile surprises.

Witnessing the Auto Expo 2018 in February, it was evident that the Indian market is way ahead of its inflection point. Of the many cars and concepts that were displayed or launched, fewer than 10% were for the mass entry-level segment.

While carmakers such as Maruti Suzuki, Toyota and Honda unveiled promising models, others including Mahindra and Tata sizzled with a range of futuristic ideas – spanning the realms of electric mobility. South Korean auto major Kia set forth its bid to tap the resolute Indian car market, which has matured over the years.

An auto industry analyst with a leading consultancy, not wishing to be named, tells DH, “The car industry in India today is driven not by utility and need, but by a sense of achievement and aspiration.”

Small beginnings

The industry has come a long way. In 1983, the coming of the humble, yet trendy Maruti’s M800 planted the want for an automobile in the mind of the Indian consumer.

The Maruti 800 not only revolutionised trends and tastes for the country’s consumer, but also imbibed a sense of capability to covet a car. For the company Maruti Suzuki India Limited (then Maruti Udyog Limited), the car turned out to be the Midas Touch. When sales of the car came to an end in 2014, more than 27 lakh M800s had hit the road, translating into the biggest success story in Indian auto industry history.

The drive to aspire and demand great cars has enthused carmakers from across the globe to take the Indian consumer seriously.

On its part, Maruti Suzuki has pivoted the understanding of the customer’s needs extremely well. Having held a commanding market share hovering around 50% for years, the company grew 14.4% in April with total sales accounting for 1,72,986 units, compared with 1,51,215 vehicles in total, including domestic sales and exports, during the same month of last year.

April 2018’s growth was particularly led by a surge in the compact car space, owing to the new-generation Swift, which was launched earlier this year, and has been garnering almost 17,000 units in sales a month.

The compact car segment (with Swift, Baleno, Ignis, Celerio, Dzire and TourS) alone registered a growth of 31.8% with 83,834 units, against 63,584 vehicles sold during the same month of the previous year.

The second biggest car retailer in the country, Hyundai Motor India, reported 6% rise in total sales in April, at 59,744 units, compared with 56,368 units in April, last year.

According to the Society of Indian Automobile Manufacturers (SIAM) report – State of the Indian Automobile Industry Quarterly Review: Q4 FY18, the sale of passenger vehicles grew by 8.04% in April-February 2018, over the same period, last year.

Within passenger vehicles, passenger cars, utility vehicles and vans grew by 3.62%, 21.34% and 4.25%, respectively, in April-February 2018, over the same period, the previous year.

The report also mentions that passenger vehicle sales touched the 3.3-million mark, while UV production crossed 1 million.

“An aware, informed Indian customer base has been on a buying spree, as can be seen in the growing year-on-year sales numbers. Carmakers are also gearing up to cater to new demands, which range from creature comforts, to cutting-edge features and safety bits,” the analyst says.

Choices galore

Today’s market has diversified way beyond the hearty A-Segment, which was the bread-and-butter for manufacturers for a long time, and a ‘four-wheeler goal’ for a population that was slowly assuming a steady purchasing power.

Currently, only Maruti, Renault, Hyundai, Datsun and Tata offer pure A-Segment products, through the Alto, Kwid, Eon, redi-GO and Nano, respectively. And the market has driven way past, with upper segments quickly amassing greater share.

Accordingly, carmakers are quick to stack up new models. One of the most awaited cars this year, the Toyota Yaris, with class-leading features including seven airbags as standard, priced from Rs 8,75,000 (ex-showroom), was unveiled recently.

Sharing the customer-centric approach taken by the Japanese automaker in India, Toyota Kirloskar Motor Deputy Managing Director N Raja says, “We thank our customers for such a heartening and exciting welcome for Toyota’s debut in the B-High sedan segment in India. As a sedan with great individuality and intuitive functions for people who constantly seek something better, we aim to offer quality that exceeds its class. We hope customers will accept the Yaris for the value propositions it has to offer in the segment.”

The Yaris, which underpins Toyota’s presence in the Indian car market, is offered in a 1.5L Dual VVTi gasoline engine, with a 7-speed CVT or 6-speed MT options. Catering to the emerging need for automatics in the segment, the CVT option is made available across all trims.

Similarly, Honda Cars India (HCIL) has commenced the production of its second-generation Amaze at its Tapukara plant in Rajasthan, due for launch on May 16. India, a key market for Honda globally, is the first country to manufacture and launch this model.

“The Amaze will be a game-changer for Honda Cars India – both in terms of boosting our business, and further strengthening our model line-up with advanced technology. The new Amaze has received excellent response from customers,” says Rajesh Goel, Senior Vice President and Director (Sales and Marketing) at HCIL.

The (Lower) C-Segment, to which the Amaze belongs, is to the tune of four lakh units annually, and is growing, despite some competition from the compact SUV space.

Goel confirms to DH that with its stellar looks and features, the Amaze is in a suitable position to attract potential SUV buyers.

Among the most visible changes sensed in customer demand, the shift towards automatic transmission - predominantly AMT (Automated Manual Transmission) - is pronounced. The Maruti Celerio was the first car in India to pioneer AMT technology, which is ubiquitous in even the A-Segment cars today.

Recently, Datsun launched a redi-GO with AMT, to which, Nissan Motor India Managing Director Jerome Saigot had stated, “In line with our commitment towards our customers, we have launched the new redi-GO Smart Drive Auto with rich features in its segment.”

Another passing trend is that of the diesel car making way for the return of the petrol car as the preferred passenger vehicle in the country. To put it in perspective, Motilal Oswal’s report on Maruti Suzuki states that during FY18, petrol segment volumes grew 16.8%, against 7.1% for the diesel segment.

These changes are even more apparent as one looks higher through the segments, all the way up to the luxury space, which is on its own, a bright spot.
Audi India Head Rahil Ansari says, “In Bengaluru, there is a shift towards SUVs from 30% to 50%. Surprisingly, we’ve also seen an increase in petrol, compared to diesel. In 2015, the split of diesel to petrol SUVs was 90:10. In 2017, it was at the level of 30% petrol.”

Talking about trends in the luxury market, Ansari says, “We see people want to afford luxury cars. If you look at the entry-level luxury segment, it’s quite often a first-time purchase. It’s something special to buy a luxury product, because people want to do it, and are waiting and willing to experience it.”

The next engine of growth in India is seen to be the electric vehicle, and carmakers are waiting with renewed zeal and optimism to hit the market with their respective EV offerings.