India ‘a very different’ car market
NEW DELHI — Leading global carmakers are reviewing their blueprint for India to boost sales and avoid more painful cutbacks, after struggling to win over consumers even as the market swings to growth and dominant local players begin to raise prices.
Automakers like General Motors, Nissan Motor and Renault SA have over the past weeks announced hundreds of job losses. Some have already reduced output, and industry analysts expect more to come.
Others, like Skoda Auto, part of Volkswagen AG, are retreating to their roots — for Skoda, “premium” cars. “India is not the most easy market in the world to crack,” Guillaume Sicard, president of Nissan India told Reuters after the company said it would cut “hundreds” of jobs at the Renault-Nissan plant.
The Indian market is, however, showing signs of recovery, with improved sales for every month this year. But the benefit is being felt mainly by India’s dominant players like Maruti Suzuki, who in July reported its market share was once again above 50%, its highest in more than a decade.
Passenger car sales in India rose five percent in the year to end-March, but global carmakers Renault, GM, Volkswagen, Skoda and Ford reported a double-digit decline, industry data showed. In contrast, Maruti and Hyundai Motor Co sales rose 11 percent. Now Maruti and Hyundai, India’s two best selling brands, are turning up the competitive heat - entering the one segment companies like Renault, Nissan and Ford Motor Co had dominated: sport-utility vehicles (SUVs). Maruti recently launched a crossover and Hyundai, the Creta SUV.
All about the cpk
Lured by a large customer base and low car penetration, automakers built large factories, expecting India to become the world’s No. 3 car market by 2020. Instead, they were undone by their lack of small models, a sparse dealer network and steep aftersales service costs.
Nissan introduced its inexpensive Datsun-branded cars last year, but failed to ramp up sales given a lack of dealerships in smaller cities, where demand for such cars is high. And consumers’ hesitance to make big purchases during a sluggish recovery has made a bad situation worse.
“They looked at India as one of the markets they need to be in, but India is a very different kind of market,” said Abdul Majeed, automotive head at consultant Pwc, pointing out for Indian drivers it not just about the initial price, but also the cents per kilometre (cpk) running costs.
Nissan and Renault say they will compete with small cars, and by growing their dealer network. GM, which announced plans to stop production at one of two plants in the country last month, is betting on 10 new locallymade models over five years.
GM will ramp up exports as well, joining Volkswagen and Ford, which are also targeting the domestic market with new compact cars.
Maruti Suzuki sells half of India’s cars, especially this Alto.