Inconsistency a Constant for Indian Automakers

MUMBAI – Changing customer preferences and fluctuations in fuel prices are reflected in the unpredictability of the Indian light-vehicle market.

Car sales in January increased 5.6% year-over-year to 171,413 units, but light trucks slipped 1.3% to 93,579, resulting in a net 3.1% rise in LV deliveries to 264,992, WardsAuto data shows.

Last month’s overall improvement compared with an 11.3% decline in January 2014 from the prior year, with car sales dropping 7.6% and light trucks tumbling 17.1%. For full-year 2014, car sales grew 2.5% and light trucks fell 8.6%, for an overall 1.9% shortfall.

Individual automakers’ performances also varied in 2014. Market leader Maruti Suzuki and No.2 Hyundai saw combined sales increase 8.3% to 1.56 million units, but deliveries by Tata and Mahindra & Mahindra slumped 20% to 712,438.

Honda and Toyota Kirloskar boosted their sales 23.7% to a combined 312,594, while Ford and General Motors together backslid 19.5% to 134,705. Deliveries by European automakers Fiat, Skoda and Volkswagen skidded 27.5%.

Maruti Suzuki features India’s four best-selling cars, the Alto 800, gasoline-powered Swift, Swift DZire diesel and Wagon R. Hyundai follows with its Elite i20 and Grand i30, while the Bolero represents Mahindra in the Top 10.

As changes in tax policy have narrowed the gap between diesel and gasoline prices, diesel-vehicle sales have contracted from 58% of the market in the 2012-2013 fiscal year to 45% through 10 months of the current 2014-2015 fiscal year, the same level seen four years earlier.

Customers, meanwhile, have been moving away from midsize sedans and utilities in favor of the newly developing segment of spacious compacts and upmarket midsize and bigger cars, plus SUVs and MPVs. Society of Indian Automobile Manufacturers data shows compacts’ current market share is 43.2%, up from 40.5% in fiscal 2012-2013.

Consumers will not be wanting for choice, as the automakers plan to launch about 50 new or refreshed models in every segment and price bracket in the remaining months of 2015.

Tata is leading the charge based on a new multipurpose platform that will underpin five new SUVs, two new, smaller Kite models, the Bolt hatchback and Zest compact sedan. Honda plans new-generation Jazz and Accord models, Fiat is preparing to launch the Avventura compact CUV and a refreshed 500 Abarth hatchback and Maruti is doing likewise with its SX4 S-cross.

Automakers also are responding to market demands in the short term by periodically offering discounts and incentives, and in the long term by increasing their retail presence in rural communities.

Maruti Suzuki has doubled its rural dealerships to 93,000 in the past two years and they now account for 32% of sales. Rural customers account for 20% of Hyundai’s business, up from 12%, and new Tata President Mayank Pareek is trying to replicate the rural success achieved while he headed Maruti.

Sales likely will be slow in February as buyers wait to learn whether the new government budget to be presented on the last day of the month will reduce taxes. Vehicle taxes already have been changed three times in the current fiscal year.