Active Stocks
Wed May 29 2024 15:13:24
  1. State Bank Of India share price
  2. 823.60 -0.88%
  1. Tata Steel share price
  2. 174.65 -0.11%
  1. HDFC Bank share price
  2. 1,509.60 -1.37%
  1. Power Grid Corporation Of India share price
  2. 317.90 1.63%
  1. ITC share price
  2. 431.20 0.54%
Business News/ Auto News / What slowdown? New auto entrants are cruising

What slowdown? New auto entrants are cruising

The demand for Seltos and Hector is indicative of the evolution in the behaviour of Indian customers below 35 years
  • Experts say the firms took a long-term approach to familiarize Indian consumers with their brand philosophy
  • MG has attracted strong interest for its maiden offering Hector (Photo: Ramesh Pathania/Mint)Premium
    MG has attracted strong interest for its maiden offering Hector (Photo: Ramesh Pathania/Mint)

    NEW DELHI:Two new entrants into India’s automobile market, Kia Motors India and MG Motor India Pvt. Ltd, have attracted strong buyer interest with their maiden offerings—Seltos and Hector—amid plummeting demand for cars.

    Auto sales have declined to multi-decade lows, prompting vehicle and component manufacturers to slash production and demand tax cuts from the government. Bookings do not always translate into sales but do indicate the enthusiasm of customers towards a particular product.

    MG Motor sold 2,018 units of the Hector SUV in August. Kia, on the other hand, is yet to come out with wholesale or retail sale numbers of its first offering.

    According to experts in the automotive industry and brand consultants, this is also indicative of the evolution in the behaviour of a certain segment of Indian customers, especially those below 35 years, as “value-conscious" from being “price-conscious", as they never shy away from trying out new brands at a higher price point, even if there is an economic slowdown or dip in the customer sentiment.

    Both companies, before the launch of their respective offerings, wanted to carve out a distinct identity through their advertisement campaigns on different media platforms.

    While Kia tried to underscore the unique design language of Seltos, MG Motor seems to have won over prospective customers with the connectivity aspect of its first vehicle.

    “Our MG Shield scheme which offers five years of free service warranty has given confidence to the customers. Having closed the bookings last month, we have a wait list of 15,000 customers. The new products are bringing compelling value proposition in the market and as a result, the consumers are coming to us," said Rajeev Chaba, managing director, MG Motor India.

    Kia had the challenge of creating awareness and breaking the stereotype with a clean and unique brand positioning, according to Manohar Bhat, vice-president and head, marketing and sales, Kia Motors India, as a late entrant here. Hence the company created the campaign on its key strength— design.

    “India as a country is evolving by being exposed to cutting-edge global technology and the customers today are more aware of the benefits of car tech. That is driving their new car purchases and pushing the automakers to offer the latest technologies to the market," said Bhat.

    MG Hector received 28,000 bookings and the company stopped taking further orders due to production constraints. Kia, on the other hand, had already received more than 30,000 bookings in the first six weeks.

    Ambi M.G. Parameswaran, brand strategist and founder of, said relative silence from auto biggies has further helped the new brands.

    “Besides, these are different looking cars which have captured the attention of young consumers," he said.

    International appeal and the designs of Kia Seltos and MG Hector have been a big draw for millennials and corporate executives scouting for new options to stand out.

    “They have deep pockets and they are not impacted by the slowdown. It’s seen that consumers advance their purchase decision when an attractive new vehicle launch takes place. Compact SUV category has seen a surge in the last one year as the preferred vehicle for in-city as well as highway driving for being sporty and zippy," said Amit Adarkar, chief executive at researcher Ipsos India.

    Clearly, their promotions worked. Brand experts say that the two companies took a long-term approach to familiarize the Indian consumer with their brand philosophy. In the last year and a half, Kia and MG Motor collectively spent 100 crore on marketing promotions leveraging television, digital, print and on-ground media across the country.

    Kia stayed true to its global strategy aligning itself with sports properties such as the Fifa World Cup, Bengaluru Football Club and Australian Open Ballkids Program in India. Known for its sleek designs, Kia also relied on digital platforms such as YouTube, Instagram, Twitter and Facebook to connect with young consumers.

    “Even brand ambassadors are role models for millennials. So actor Benedict Cumberbatch—brand ambassador of Hector—and Tiger Shroff for Seltos, who have huge fan followings worked wonders too," Adarkar pointed out.

    A senior media planner who manages a rival car brand said the marketing efforts of these companies in the past year have not been for the model launch. “Rather they were familiarizing consumers with the company’s credibility, lineage and global models. The Indian market is very ruthless companies don’t get a second chance. The acceptance in form of bookings is a testimony to their marketing efforts," he said, declining to be named.

    Apart from emphasizing on the uniqueness of their products, both carmakers—just like traditional ones—are trying to win over customers on the reliability quotient. While MG has launched schemes offering guaranteed buyback with return of 60% of the value of its product after three years, Kia is trying to assure customers of service with its network of 265 touch points in 160 cities.

    Beyond the flashy brand campaigns, both companies have been as traditional as possible when it comes to selling their respective products, said Avik Chattopadhayay, founder, Expereal.

    “There will always be ‘early adopters’ for any new brand and these are the customers who give the initial push since they have the wherewithal. I think the key will be MG’s buyback plan and Kia’s aggressive positioning while rolling out so many touch points," he said.

    You are on Mint! India's #1 news destination (Source: Press Gazette). To learn more about our business coverage and market insights Click Here!

    Catch all the Auto News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
    More Less
    Published: 02 Sep 2019, 11:17 PM IST
    Next Story footLogo
    Recommended For You
    Petrochemical Stocks