Dominance play in auto segments

Most segments have a player with a minimum market share of 40%

Maruti Suzuki, the country’s largest carmaker, is set to close the year with 50 per cent share in domestic market, while over a dozen large and small players together have another half. Dominance of a single company is becoming the prominent theme of the Indian automobile market, which has seen the entry of multiple international companies across segments.

This dominance is not limited to passenger vehicles (PVs) — cars, utility vehicles and vans. Almost each segment of the domestic industry is dominated by a single player, which sits on a minimum market share of 40 per cent. The trend is not limited to personal vehicles such as cars and two-wheelers, but also extends to various commercial vehicles and even tractors.

In most of these, there is a wide gap between market leader and the second-biggest.

The extreme case is with threewheelers, where six players operate. Bajaj Auto is biggest in the segment with a share of 58 per cent. Five other players, including Mahindra & Mahindra (M&M) and TVS Motor, are left with the remaining market. The second biggest Italian brand Piaggio has 24 per cent.

In scooters, Japan’s Honda Motorcycle and Scooter India sits on a high 57 per cent. Aggressive moves by rivals have not been able to dent share in a fast-expanding market.The remaining six, including Hero MotoCorp and TVS Motor, together own 43 per cent. TVS, the second biggest, has a market share of 16 per cent.

Home-grown Hero MotoCorp is top in the motorcycle market, with a share of 51 per cent while the remaining 10 brands — including Honda and Bajaj together hold less than half. The nearest rival, Bajaj Auto, is at 18 per cent. Pawan Munjal, chairman and managing director (CMD), Hero MotoCorp, said last month that it was important for the company to hold and expand the domestic market share. “We need funds from domestic business to plough into global business and R&D (research & development). We definitely want a higher market share,” he said.

Tata Motors’ market share in trucks has marginally dipped from the mid-50s to 51 per cent but it still dominates. Ashok Leyland has one-third of the market. Unlike most segments, trucks have remained the stronghold of indigenous brands in spite of the entry of global biggies such as Daimler and Sweden-based Scania.

In PVs, the biggest segment of the industry by value, Hyundai has about 16 per cent. Hyundai’s managing director and chief executive officer for India, Y K Koo, said the company could not compete with Maruti Suzuki in volume but had a dream to sell a million cars in a year in the Indian market from the current 0.53 million. What puts Maruti Suzuki at an edge? Kenichi Ayukawa, MD and CEO, said the company was fortunate to have a long history in India. “We were the first player here to set up a modern automobile industry over 35 years ago. We are very much focused on the customer and we try to develop our products keeping in mind the affordability of the masses.”

Outside this club of 50 per cent market, there are players in segments such as tractors and luxury cars with a share of at least 40 per cent. M&M, the market leader in tractor, has 43 per cent. Pawan Goenka, MD at M&M, said the firm was industry leader by a big margin as the second player — Tractors and Farm Equipment — is at 18-19 per cent. “In terms of market share, there is only so much that you can go. It could become 44 or 45 per cent. You cannot assume everyone else will let you become 50-55 per cent. We will maintain our share and focus on incremental growth.” The firm also enjoys 43 per cent in light commercial vehicles (goods carrier). German luxury car brand Mercedes-Benz leads market with a share of over 40 per cent.

The trend is not limited to personal vehicles, but also extends to various commercial vehicles and even tractors