One of the most revealing indicators for economic prosperity of a country is the growth of the automobile sector, specially the sales of cars. Booming car sales thus conclusively indicate that the Indian economy is doing well.
Fourteen players in the car industry together sold 19.83 lakh cars in the financial year 2010-11, a whopping 30 per cent more than 15.28 lakh cars sold in the previous financial year. Surely the Rs 100,000 crore Indian car has found a place in the world map by becoming the fastest growing in the whole world.
“The impressive growth witnessed by the auto sector appears primarily to be driven by the strong revival of demand spurred by ongoing growth momentum of the economy,” said Society of Indian Automobile Manufactures (SIAM) Senior Director Sugato Sen. “The growth rate would have been still better had there been no global slowdown.”
Agreed Toyota Kirloskar Motors Deputy MD Shekhar Viswanathan “Rapidly rising disposable income of Indian middle class is fuelling the growth of the car industry.”
Though the industry did extremely well, same was not true for every one. While aggressive new players ate away market share from the incumbent players, some old ones actually slowed down.
The market leader, Maruti Suzuki India with 49 per cent market share pushed up its car sales by 26 per cent to 9,66,447 in 2010-11, the second largest Hyundai Motor India grew 14 per cent. Tata Motors which sharply revived sales of country’s smallest car Nano, sold 2,56,202 cars, 27 per cent more than the previous year. Ford India and General Motors too did well. (See table)
But there were a few laggards. Honda Siel Cars sold 58,951 cars, 3.87 per cent lower than previous year, Fiat India’s sales was down 15 per cent and Hindustan Motors dropped 20 per cent.
Action speaks
Mixed fortunes among the car manufacturers in 2010-11 also demonstrated the fact that those who were more active in terms of new launches and refreshments did better than those who were not. Maruti Suzuki, for example, re-launched all its old models with much superior K-series engine. Maruti now has this new petrol engine in Alto, Ritz, A-Star, Zen Estilo, Wagon R and in Swift. The new K-series engine not only provides much better mileage than the earlier engine but also generates more power to the car.
“The primary factors that helped us to boost our sales is introduction of new fuel efficient K-Series engines in virtually all the models. Result of intensive in-house research and development efforts, this engine boosted the image of our cars,” Maruti Suzuki India Chief General Manager (Marketing) Shashank Srivastava said. “It helped us keeping ahead of our competitors and has considerably improved our portfolio in the auto market.” Maruti also introduced a diesel version of its sedan SX4 and also launched a luxury sedan Kizashi. Hyundai too introduced a more fuel efficient Kapa engine for its small cars.
New launches and refreshment also helped others. Hyundai launched new i10 and new Verna, Ford India’s Figo, Nissan Motor India’s Micra, Vokswagen’s Polo, Toyota’s Etios and Skoda Auto India’s Fabia are a few good examples of how excitement created with new models helped them sell more.
During the fiscal, Tata Motors launched the all-new Tata Indica eV2, Tata Indica Vista Drivetech4, Tata Indigo e-CS, new Tata Manza, Tata Venture and the Tata Aria. Said Viswanathan of Toyota, “There is a huge excitement for our new car Etios and we have 5 months waiting period for it.
Now that we have started the second shift in the new plant our monthly production has gone up to 6,900. Hopefully we will be able to clear the backlog soon.” According to SIAM President Pawan Goenka the passenger vehicle segment saw 24 new launches and 40 refreshed versions in 2010-11.
Small is big
The other interesting feature of the Indian car market is that although there were several hyped up launches of big and expensive sedans, the small car segment continued to rule Indian roads in 2010-11. Small and compact cars accounted for 78 per cent of industry’s total sales. In the A1 segment, Tatas revamped their entire strategy on Nano which led to its sales zooming to 70,432 in 2010-11, more than double of 30,350 it sold in the previous year.
To arrest the sagging sales of Nano, Tata Motors changed the earlier plant to sell Nano only through pre-booking to open sales about six months ago. As open sales began the company created the necessary sales, marketing and finance infrastructure. In addition to 617 odd regular sales outlets the company set up Special Nano Access Points (as of now about 210 across the country) where customers can experience, test-drive of the car.
To build consumers’ confidence the company unleashed huge advertising campaigns through print and television media and also offered a 4-year or 60,000-km (whichever is earlier) manufacturer’s warranty. The company also tied up with 28 banks and non-banking finance companies to offer loans up to 90 per cent of the value at easy rates.
“The impact of these initiatives can be seen in the progressively growing monthly sales of Nano-- from 5,784 in December 2010 to 8,707 in March,” said Tata Motors Vice President R Ramakrishnan. As the company’s plant at Sanand, Gujarat, reaching almost the full capacity, Tatas may soon have to build another plant for Nano, said Ramakrishnan.
Speedy sales growth of Ford Figo, Nissan Micra, Chevrolet Spark and Beat, Hyundai i10, Maruti Alto and Swift also point to the fact that small and compact cars are in great demand. No wonder Toyota is planning to launch a hatchback small car Liva and Honda a small car Brio around June this year. To complement its offerings GM will soon launch Beat with a one litre diesel engine. Said GM India Director Marketing P Balendran, “We have done very well in 2010-11 as our two small cars Spark and Beat together sold around 72,000 and Cruze has seen good pick up in demand.”
Exports stagnate
Another interesting trend is that India is slowly but steadily emerging as a export hub for cars. The country exported 447,403 cars in 2010-11, almost same as previous year. Hyundai Motors which exports i10 and i20 from its plant in Chennai exported 2.33 lakh cars, Maruti exported 1.36 lakh cars and the new player Nissan India exported 55,000 cars. With the demand pick up in the European market, exports of cars from India in the current year are expected to be much higher.
Growth to slow down
The boom story in 2010-11, however, may not be repeated in the current financial, fears car makers. Both Balendran and Viswanathan feel that car sales growth in the current year may slow down to around 15 to 17 per cent as against 30 per cent growth last year.
Reasons are several: hike in interest rates, increase in commodity prices (steel, copper, plastics), overall inflation in the economy lowering the disposable income, rising wage cost and above all very high prices of petrol and diesel. “Current year scenario is not as rosy as it was last year. Costs have gone up for almost everything, but there is a limit to which we can pass on the cost.”
Balendran of GM thinks that apart from all round increase in cost, steep and frequent rise in interest rates will severely affect customers’ ability to take loans. “This is big problem as 85 per cent of cars in India are bought with loans” he said.
Fourteen players in the car industry together sold 19.83 lakh cars in the financial year 2010-11, a whopping 30 per cent more than 15.28 lakh cars sold in the previous financial year. Surely the Rs 100,000 crore Indian car has found a place in the world map by becoming the fastest growing in the whole world.
“The impressive growth witnessed by the auto sector appears primarily to be driven by the strong revival of demand spurred by ongoing growth momentum of the economy,” said Society of Indian Automobile Manufactures (SIAM) Senior Director Sugato Sen. “The growth rate would have been still better had there been no global slowdown.”
Agreed Toyota Kirloskar Motors Deputy MD Shekhar Viswanathan “Rapidly rising disposable income of Indian middle class is fuelling the growth of the car industry.”
Though the industry did extremely well, same was not true for every one. While aggressive new players ate away market share from the incumbent players, some old ones actually slowed down.
The market leader, Maruti Suzuki India with 49 per cent market share pushed up its car sales by 26 per cent to 9,66,447 in 2010-11, the second largest Hyundai Motor India grew 14 per cent. Tata Motors which sharply revived sales of country’s smallest car Nano, sold 2,56,202 cars, 27 per cent more than the previous year. Ford India and General Motors too did well. (See table)
But there were a few laggards. Honda Siel Cars sold 58,951 cars, 3.87 per cent lower than previous year, Fiat India’s sales was down 15 per cent and Hindustan Motors dropped 20 per cent.
Action speaks
Mixed fortunes among the car manufacturers in 2010-11 also demonstrated the fact that those who were more active in terms of new launches and refreshments did better than those who were not. Maruti Suzuki, for example, re-launched all its old models with much superior K-series engine. Maruti now has this new petrol engine in Alto, Ritz, A-Star, Zen Estilo, Wagon R and in Swift. The new K-series engine not only provides much better mileage than the earlier engine but also generates more power to the car.
“The primary factors that helped us to boost our sales is introduction of new fuel efficient K-Series engines in virtually all the models. Result of intensive in-house research and development efforts, this engine boosted the image of our cars,” Maruti Suzuki India Chief General Manager (Marketing) Shashank Srivastava said. “It helped us keeping ahead of our competitors and has considerably improved our portfolio in the auto market.” Maruti also introduced a diesel version of its sedan SX4 and also launched a luxury sedan Kizashi. Hyundai too introduced a more fuel efficient Kapa engine for its small cars.
New launches and refreshment also helped others. Hyundai launched new i10 and new Verna, Ford India’s Figo, Nissan Motor India’s Micra, Vokswagen’s Polo, Toyota’s Etios and Skoda Auto India’s Fabia are a few good examples of how excitement created with new models helped them sell more.
During the fiscal, Tata Motors launched the all-new Tata Indica eV2, Tata Indica Vista Drivetech4, Tata Indigo e-CS, new Tata Manza, Tata Venture and the Tata Aria. Said Viswanathan of Toyota, “There is a huge excitement for our new car Etios and we have 5 months waiting period for it.
Now that we have started the second shift in the new plant our monthly production has gone up to 6,900. Hopefully we will be able to clear the backlog soon.” According to SIAM President Pawan Goenka the passenger vehicle segment saw 24 new launches and 40 refreshed versions in 2010-11.
Small is big
The other interesting feature of the Indian car market is that although there were several hyped up launches of big and expensive sedans, the small car segment continued to rule Indian roads in 2010-11. Small and compact cars accounted for 78 per cent of industry’s total sales. In the A1 segment, Tatas revamped their entire strategy on Nano which led to its sales zooming to 70,432 in 2010-11, more than double of 30,350 it sold in the previous year.
To arrest the sagging sales of Nano, Tata Motors changed the earlier plant to sell Nano only through pre-booking to open sales about six months ago. As open sales began the company created the necessary sales, marketing and finance infrastructure. In addition to 617 odd regular sales outlets the company set up Special Nano Access Points (as of now about 210 across the country) where customers can experience, test-drive of the car.
To build consumers’ confidence the company unleashed huge advertising campaigns through print and television media and also offered a 4-year or 60,000-km (whichever is earlier) manufacturer’s warranty. The company also tied up with 28 banks and non-banking finance companies to offer loans up to 90 per cent of the value at easy rates.
“The impact of these initiatives can be seen in the progressively growing monthly sales of Nano-- from 5,784 in December 2010 to 8,707 in March,” said Tata Motors Vice President R Ramakrishnan. As the company’s plant at Sanand, Gujarat, reaching almost the full capacity, Tatas may soon have to build another plant for Nano, said Ramakrishnan.
Speedy sales growth of Ford Figo, Nissan Micra, Chevrolet Spark and Beat, Hyundai i10, Maruti Alto and Swift also point to the fact that small and compact cars are in great demand. No wonder Toyota is planning to launch a hatchback small car Liva and Honda a small car Brio around June this year. To complement its offerings GM will soon launch Beat with a one litre diesel engine. Said GM India Director Marketing P Balendran, “We have done very well in 2010-11 as our two small cars Spark and Beat together sold around 72,000 and Cruze has seen good pick up in demand.”
Exports stagnate
Another interesting trend is that India is slowly but steadily emerging as a export hub for cars. The country exported 447,403 cars in 2010-11, almost same as previous year. Hyundai Motors which exports i10 and i20 from its plant in Chennai exported 2.33 lakh cars, Maruti exported 1.36 lakh cars and the new player Nissan India exported 55,000 cars. With the demand pick up in the European market, exports of cars from India in the current year are expected to be much higher.
Growth to slow down
The boom story in 2010-11, however, may not be repeated in the current financial, fears car makers. Both Balendran and Viswanathan feel that car sales growth in the current year may slow down to around 15 to 17 per cent as against 30 per cent growth last year.
Reasons are several: hike in interest rates, increase in commodity prices (steel, copper, plastics), overall inflation in the economy lowering the disposable income, rising wage cost and above all very high prices of petrol and diesel. “Current year scenario is not as rosy as it was last year. Costs have gone up for almost everything, but there is a limit to which we can pass on the cost.”
Balendran of GM thinks that apart from all round increase in cost, steep and frequent rise in interest rates will severely affect customers’ ability to take loans. “This is big problem as 85 per cent of cars in India are bought with loans” he said.
