Auto makers bet on new launches to rev up sales4 min read . Updated: 25 Sep 2011, 11:23 PM IST
Auto makers bet on new launches to rev up sales
Auto makers bet on new launches to rev up sales
Mumbai: Seven new models—five cars, one motorcycle and a scooter—will hit the roads in October and November, something not seen often, even in the season that coincides with the festivals of Durga Puja, Navratra and Diwali, considered auspicious for big-ticket purchases.
Cars sales in India skidded 11% for the second consecutive month in August to 144,516 units from the year-ago period.
Analysts said the new launches will restore the lustre only partially.
For the local arms of Honda Motor Co. Ltd and Hyundai Motor Co., the Honda Brio and Hyundai Eon models mark the debut in segments that have been the stronghold of Maruti Suzuki India Ltd for decades.
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The Brio, slated for a 27 September launch with a price tag of ₹ 4-5 lakh, will be Honda’s first bet in the small car segment that accounts for at least 75% of the local market.
The biggest launch after the City, Honda expects the Brio, which will compete with the Hyundai i10 and Maruti Suzuki’s Ritz and Swift, will be critical for the firm’s sales volume.
The Brio will come with a petrol option, but Jnaneswar Sen, senior vice-president (sales and marketing) at Honda Siel Cars India Ltd, doesn’t see that as a disadvantage in a market that has seen a clear shift to diesel. The price gap between diesel and petrol has widened to ₹ 26 a litre.
“While there is a trend towards diesel-ization, the excellent cost of ownership will ensure Brio petrol finds favour among the buyers," Sen said.
Honda is in the process of ramping up its dealership network to 143 in 91 cities by March from 125 dealers in 77 cities in April 2010.
Eon, a small car from Hyundai Motor India Ltd, the country’s second largest car maker by sales, is expected to go on sale in late October. Estimated to be priced between ₹ 3.5 lakh and ₹ 4.5 lakh, Hyundai has pitted Eon against the Maruti Alto, India’s largest selling car that clocks monthly average sales of 25,000-30,000.
Mahantesh Sabarad, an analyst at Fortune Equity Brokers (India) Ltd, said that with the i10 being available in so many trim levels, the Eon and i10 may cannibalize into each other’s volumes.
With the entrance of a strong rival in the segment, it will be difficult for Maruti to sustain volumes, says Puneet Gupta, an analyst with market research and sales forecasting firm IHS Automotive. “They will have to work out new strategies to ward off competition," Gupta said.
For Mahindra and Mahindra Ltd, which takes wraps off its sports utility vehicle, the XUV 500, on Wednesday, it’s the creation of a new segment and giving shape to its global aspirations. The XUV 500 has been developed by the company’s research and development centre in Chennai and is touted to be bigger than the Scorpio project in terms of product development costs, scope and scale.
With the new model, Mahindra aims to break into the global league.
In an earlier interaction with Mint, the company’s vice-chairman, Anand G. Mahindra, had said, “It will transform the perception that we make great and enduring products, but they are not aspirational products."
The company plans to sell the XUV in South Africa, western Europe, Australia and South America.
Hero MotoCorp Ltd, formerly Hero Honda, will launch India’s first dirt bike and a gearless scooter model called Maestro in October. The models, the first after the 26-year partnership between the Munjals-owned Hero and Japan’s Honda came to an end, will sport Hero’s new brand identity. With an engine displacement of 180cc, the bike will be Hero’s first in the niche segment.
Czech car maker Skoda Auto, a part of the Volkswagen Group, too, is changing tack. The local arm of the firm will launch a sedan called Rapid in the range of ₹ 7-10 lakh in the last week of October.
The Rapid will be the company’s first offering in the sub-Rs 10 lakh sedan market. It will have 60-70% local content and compete with the Hyundai Verna Fluidic, Volkswagen’s Vento and the Maruti Suzuki SX4.
Gupta of IHS Automotive said that even as the new launches will revive sales to an extent, the actual impact on overall sales will be seen only next year as typically buyers postpone purchases to get the benefit of the model year change.
While the launches will definitely arrest the decline in growth, it will be nowhere be close to earlier expansion levels of 15-20%, Gupta added.
Tata Motors Ltd, which has been ceding ground to rivals in the utility vehicles segment, plans to give its old workhorse, the Sumo, yet another makeover. The company plans to launch the new Sumo in October. Beyond cosmetic changes, it will have a new engine, a company spokesman said.
The Society of Indian Automobile Manufacturers expects to end the current fiscal year with 10-12% growth, but the target may not be achievable, director general Vishnu Mathur said. “We may end with a 5-6% expansion in sales," he said.