What led to success of new players in the stagnant Indian automobile sector?

The latest entrants in the automobile sector received a salute from the Indian consumer.

Update: 2019-08-03 06:13 GMT

The Indian automobile industry recently faced a major setback in terms of sales of passenger vehicles. The setback went to such an extent that some automobile manufacturers had no option but to shut their manufacturing plants down and some others from the industry had to lay off a major per cent of the workforce. Experts say that this is the outcome of a slow economy, NBFC Crisis, Global Financial Crisis and govt. Policies like Demonetisation. What happened to the automobile diet of the Indian consumers that they have started refraining from buying new vehicles?

The Rough Patch

In a market like ours’, consumerism cannot be eroded easily and people aren’t that optimistic for EVs that they are ready to wait for the right EV, rather than purchasing a new car right now. After all, we have manufacturers like Maruti Suzuki, Hyundai, and Honda offering best of their innovations to the Indian consumer, yet they're failing badly at the game. The numbers indicate a 15.06 per cent decline in the Sales figures of Maruti Suzuki for June 2019, Hyundai observed another 3.2 per cent decline in their passenger vehicle sales and a major hit was taken by Honda Motors India with a staggering 41 per cent decline in their sales volume.

Despite some of the most successful models like the Baleno and Dzire from Maruti, some of the best-sellers like the Elite i20 and Creta from Hyundai, and some of the segment disruptors from Honda like the new Amaze, all these manufacturers with the best they could offer, are failing to capture the hearts of the Indian consumers. What is the reason behind this stagnation? Well, if we assume that it was the cash crunch aided by the advent of OLA and UBER, then people would have given the same reply to the KIA Motors India & Morris Garage (MG) India as well.

A Breath of Fresh Air

Both MG and KIA have recently launched their India specific models, the KIA Seltos and the MG Hector, putting forward the best in class innovation and technology designed specifically with the Indian consumer and our market in mind. These new entrants have taken the industry by storm evidenced by the fact that the KIA Seltos registered 6000+ bookings on the day of its launch itself & MG Hector has received, 21000+ bookings since its launch on 4th June 2019.

MG Hector’s bookings soared so high that MG had to stop registering new bookings owing to its inability to manufacture more than 2000 cars per month as of now, which they’ll surely consider increasing seeing the market response.

The Why and the How

When the vehicle sales in India observed the sharpest fall since two decades, experts opined that it was a total of 3 reasons that had led to this decline. Firstly, BS-VI emission norms which are to be made applicable from 1st April 2020 confused the consumers whether to buy that new car now or wait for the newer emission norms to apply.

Secondly, the soaring interest rates on bank loans increasing the overall cost of financing cars. And, last but not least, the hassle-free services offered by cab aggregators like Ola and Uber aided in eroding the stress of maintenance costs and fuel prices. But, the success of these two new entrants demonstrate that the Indian consumer may just have been discontent with the available choices in the market and was looking for fresher alternatives.

Maruti Suzuki, the king in the Indian auto industry is apparently losing the trust and faith of Indian consumers. They seem to have stopped manufacturing well-built and durable cars and kept on compromising on their build quality and focusing more on better fuel economy. Successes like Maruti Baleno and Alto performed poorly in various crash tests and the recurring news of the poor built quality was commented upon by consumers many times, yet the company is turning a blind eye towards tackling the same. Maruti’s compromise on build quality and safety could be even more evident once the proposed stricter norms of crash testing under BNVSAP (Bharat New Vehicle Safety Assessment Program) comes into play.

Hyundai has also inflated its car prices without offering much significant increase in value to its customers. Honda made quite a statement with it’s new Amaze but eventually, it failed to optimize and capitalize upon the momentum in the market to some extent. There was a time when the legendary City from Honda’s stable was the first choice for people buying a C Segment Sedan but now consumers have started looking for better and more economical alternatives.

 Lesson learned -Know your audience:

In my opinion, KIA Motors India & MG Motors India read the markets with the sharpest eye possible. Hats off to their strategy team for their detailed conclusions about the market which are proving to be successful. The Indian consumer was well-read, open-minded mature enough to experiment rather than go for the available options. Kia has even future-proofed itself by launching the Seltos with BS-VI compliant diesel as well as Petrol engine options rendering them unaffected with the approaching chaotic transition phase to BS-VI. Both these companies launched SUVs and tasted success considering the recent successful products in the Indian automobile market. Maruti Suzuki Brezza, Hyundai Creta, Jeep Compass, Ford Ecosport, all baing compact and mid-size SUVs showcasing the love of the Indian consumer with Road presence and Ground Clearance. Hyundai had also read the market accurately and have had a taste themselves with the launch of Hyundai Creta and more recently the Venue.

To summarise

The Indian automobile manufacturers need to bring an impending change in their outlook & strategy towards the Indian Consumer. They need to match global standards not only in terms of safety and economy but style, technology, connectivity and features as well. The consumers are always ready to spend if you hit their emotional nerve right. They need to feel smart & upmarket with their every purchase. As Abraham Lincoln once said, “You can fool all the people some of the time and some of the people all the time, but you cannot fool all the people all the time.”

By Vineet Sharma, Automobile Communications Professional, Media Corridors/

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