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MOTOWN MELTS DOWN
The signs of recovery remain elusive for India’s automobile industry. While all stakeholders continue to bet on future prospects, the longer-than-expected slowdown has raised concerns over growth prospects. While sales during the past few months showed improvements mainly due to new product launche

H1 of current fiscal proved to be one of the worst periods since 2002-03, with only two segments reporting positive growth in sales – scooters and bikes. All other segments, including cars, are in the negative growth curve. Yet there are signs of hope. While urban customers continue to stay away from vehicle showrooms, rural India seems to be providing some respite for car and two wheeler firms. Analysts point out that with interest rates still high and fuel prices rising, Indian auto firms are not hopeful of a major pick-up in sales till economic conditions improve.

“Passenger vehicle (PV) sales in India continue to be under pressure with the market declining by five per cent during H1. On a calendar year basis, the PV market has gone down by almost eight per cent during the first nine months of 2013 – and all the three PV sub-segments, passenger cars, utility vehicles and vans have been impacted,” said Rakesh Batra, Partner - Automotive Practice, Ernst & Young.

 

Passenger cars – new launches and sops attract buyers

Amid sinking sales trend, car makers have been attempting to come out with new models to keep the momentum alive. Maruti has come out with a new variant of its hatchback Wagon-R and Hyundai has rolled out Grand model, while Honda continues to ride on its compact sedan Amaze.

Maruti, Honda, Renault and Fiat reported positive growth in car sales during H1, while all other brands have seen drop in their volumes.  “In the current market scenario volume growth is a big challenge. Last month, we launched our new model Grand in the midst of slowdown and have received phenomenal response from our customers. We expect the market challenges to continue and have a cautious optimism for upcoming festive season,” Rakesh Srivastava, senior vice president - sales & marketing, Hyundai Motor India Ltd (HMIL) said.

Hyundai’s Grand has met with strong response from customers and in September, Grand emerged as the fifth largest selling car brand in the country after four models of Maruti – Alto, Swift, Dzire and WagonR.

 

Compact SUVs are the current flavour

Like passenger cars, Utility Vehicle(UV) segment sales too are riding on new launches, particularly the compact SUVs (sport utility vehicles). Though the first half saw total UV sales falling by about five per cent, recently launched compact SUVs are bucking the slow down trend.  With grand success of its compact SUV EcoSport, Ford emerged second top player in UV segment after M & M in September.

“The auto industry is definitely in need of a trigger in terms of a stimulus to boost consumer sentiments leading to a turnaround in the sector as well as a revival of the economy in general,” said Pravin Shah, chief executive - automotive division, Mahindra & Mahindra.

Interestingly, French car maker Renault has been facing the heat of increased competition after the launch of Ford EcoSport. Renault’s Duster, launched in July 2012 with a starting price of Rs 7.19 lakh, was a big hit among the Indian buyers and it fetched record volumes despite poor market conditions.  While several others are seriously working out their strategies for entering compact SUV segment, the latest product to enter the market is Nissan’s Terrano, a premium compact SUV built on Duster’s platform but priced well above Duster.

The compact SUV segment will continue to be an attractive category as new models come with stylish features, suiting the changing buyer preferences particularly in urban locations besides being sold at low price points.

 

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