In­dia ‘a very dif­fer­ent’ car mar­ket

The Witness - Wheels - - MOTORING -

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.

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