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Automatic cars zip ahead...
Automatic Manual Transmission (AMT) penetration is emerging as a good solution for price-conscious Indian car buyers.

AMT variants address both concerns of fuel efficiency as well as ownership cost. They appear to be offering a better value proposition for Indian car buyers given the relatively smaller price premium to the manual options as also relatively lower maintenance costs when compared with conventional automatic cars.

 Car transmission is classified into ‘manual transmission’ (MT) and ‘automatic transmission’ (AT). With the Indian market being highly price conscious, it has primarily relied on manual transmission owing to lower cost (both upfront as well as maintenance costs over its life), a report of the rating agency ICRA pointed out.

The worsening traffic situation in cities is a primary motivating factor for acceptance of the automatic vehicle, as it considerably reduces the fatigue of a driver in bumper-to-bumper traffic. Also, the declining cost differential between manual and automatic gearboxes, owing to maturity in technology, has resulted in a rising trend of automatic transmission in models offered by OEMs.

AT has significantly high penetration (90 per cent plus) in the luxury segment (>Rs. 30 lakh) but their penetration in the mass segment is quite small. AT vehicles constituted less than five per cent in domestic new car sales during FY2016 but their share is likely to increase significantly in the medium term.

 

Perception changing...

AT is still considered a luxury feature amongst Indian car buyers, though rising awareness and usage of AT in entry-level cars are slowly resulting in higher acceptance of AT in the domestic PV market.

 The share of the automatic car segment is improving in India. Today, the automatic transmission option is available in basic cars like Nano and Alto K10, catering to a much wider car audience as compared to the AT option available few years back in the Rs 7 Lakh+ price bracket.  It is now expected that automatic car transmission will account for over 15 per cent (excluding luxury cars) by FY2020.

 Maruti Suzuki has trebled the production capacity of AMT units in response to the high demand for such cars in the country. It has sold over a lakh automatic cars. The utility vehicle (UV) segment, which has a relatively lower AT penetration, will also witness an up-shift with some of the recent launches in the compact UV segment like Creta, BRV, TUV 300 as well as large UVs like

Innova Crysta, Ford Endeavour, which are already available with AT variant.

Earlier, the Indian AT market mostly relied on CVT (continuous variable transmission) and TC (torque converter) transmissions. However, the acceptance level has improved substantially post the launch of Celerio. While AMT is not a very smooth transmission mechanism, it addresses the primary concerns of fuel efficiency and maintenance costs. An AMT vehicle will cost about Rs. 40,000–Rs. 50,000 over a similar variant with manual transmission; whereas other types of AT will have a price difference of about Rs. 100,000 in case of TC/CVT to up to Rs. 200,000 for DCT transmission, stated the ICRA report. The maintenance cost of AMT vehicles is also comparable with that of the manual transmission variant. Consequently, AMT has gained wide acceptance in the Indian PV market, especially in the entry segment; although now, premium cars are also coming out with other transmission types like TC, CVT or DCT.

 

Global scenario

Developed economies have a much higher share of automatic cars whereas emerging markets usually favour manual cars, due to cost economics. While it is true to a certain extent in geographies like Japan and the US, where automatic cars accounted for over 90 per cent of the total PVs sold, the scenario is reversed in Europe where manual cars are preferred even in the luxury segment. The reason for low automatic transmission penetration in the European market is attributed to licensing requirements  – people holding licences to drive manual cars can also drive automatic cars, but not vice versa. The manual transmission is also preferred in the hilly terrains of Europe.

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