The Indian automobile industry is going through some turbulent times facing the worst sales slump in last 18 years. The passenger vehicles, in particular, is among the worst hit segment. According to data released by the Society of Indian Automobile Manufacturers (SIAM), in the April-June period, the vehicle sales across all categories declined by 12.35 per cent to 60,85,406 units against 69,42,742 units in the same period of last year.
The passenger vehicle sales, on the other hand, declined by 18.42 per cent to 7,12,620 units compared with 8,73,490 units in the year-ago period, while the domestic car sales were down 24.97 per cent to 1,39,628 units as against 1,83,885 units in June 2018.
The negative buyer sentiments can be attributed to a variety of reasons:
1) Upcoming BS-VI emission norms applicable from 1st April, 2020 has left many people confused on whether to buy a car now or to wait till the new cars with BS-VI engines arrive
2) High interest rates on bank loans
3) Smart mobility solutions like vehicle sharing (Ola and Uber)
4) High fuel prices
5) Rural distress because of the stagnation in rural wages
According to Nikunj Sanghi, president of the Automotive Skill Development Council and past president of the Federation of Automotive Dealers Associations (FADA) "A person would need a vehicle, but he is prepared to wait. The purchasing power of people is in terrible shape."
However, the launch of new brands in India like MG Motor and Kia Motors has brought some sign of relief for the otherwise pessimistic and double digit negative growth witnessing auto industry. Both the automakers decided to enter India at a time when the market trend predicted a hard time for them, but have proved their credibility by witnessing record bookings.
MG Motor, the 96-year old British brand and now owned by China’s biggest automobile conglomerate SAIC launched the Hector SUV in India as the ‘India’s First Internet Car’ and garnered a record number of 21,000 bookings within a month. This prompted MG to shut bookings temporarily to meet the production capacity.
Kia Motors, the 8th largest automaker in the world and a known South Korean brand, on the other hand, announced the opening of booking on 16th July, 2019 and witnessed an industry record of 6,046 units booked within 24 hours, which means more than 250 units were booked per hour.
Not only these two brands, Hyundai, the second largest car maker read the market requirement early and launched the India’s First Connected Car – Venue compact SUV that almost toppled the segment leader Maruti Suzuki Vitara Brezza in the June 2019 sales.
These numbers go on to show that the Indian automobile industry has matured exponentially in the past couple of years and buyers no longer prefer tried and trusted brand. Instead, they are willing to experiment more, given the car meets the global standards.
Also, all three of the mentioned cars have a common thing: all three are SUVs (reaffirming the love of Indians towards big cars) and all three offer Connected Technology (showing the increasing young buyers in the country).
Given these new trends in the industry, traditional automakers like Maruti Suzuki, Honda and other brands have to relook at their product strategy to keep the ball rolling in their favour to match the new brands and cars.
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