Car firms scale back on new launches as norms tighten
NEW DELHI: Car launches have come down by half in the last four years as automobile manufacturers struggle to adapt to rapidly changing regulations, industry executives said. The number of car launches were 10 in 2013, which fell to nine in 2014 and rose to 12 in 2015, before plunging to five each in 2016 and 2017, Morgan Stanley Research said.
The decline seen in 2015 coincides with heightened awareness of vehicular pollution and India’s decision to move from Bharat Stage IV (BS-IV) to BS-VI, the toughest automobile emission norms in the world, skipping the intermediate BS-V.
With new safety norms taking effect in October 2018, there is little chance of new launches any time soon. “Most of the car makers are either reeling under losses or have huge investments in upgrading their products to BS-VI norms by 2020. Hence, the number of new launches has dried up,” a top executive at one of the leading car makers said on condition of anonymity.
According to two industry executives that Mint spoke to, except the top five car makers, most others have refrained from investing further as sales have stagnated at around 3 million.
Take out Maruti Suzuki India Ltd, India’s largest carmaker, and it gets worse. Even South Korea’s Hyundai Motor India Ltd—second largest car maker— has not launched any new brand since Creta in 2015.
The two exceptions are Maruti Suzuki which launched S-Cross, Baleno, Ignis and Vitara Brezza in the last three years, and Tata Motors Ltd with Tiago, Tigor, Hexa and Nexon.
In the same period, Toyota Kirloskar Motor Pvt Ltd, Ford India Pvt Ltd, Nissan India Pvt Ltd and Volkswagen India Pvt Ltd have launched just one product in the market, and their product pipeline also does not boast of any new offerings in the next two years.
“Most car makers have been cautious about investing further, the reason being the jump from BS-IV to BS-VI norms and other challenges like profitability. Also, the industry has made losses from judicial interventions as well like banning diesel cars, trucks and stopping the sales of BS-3 vehicles. GST and demonetisation also played their part in pulling down the market,” said another senior industry executive, requesting anonymity.