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An Independent Study - August 2010


  • 1. A Detailed Analysis of the Hatchbacks in the Indian Automobile Market(An Independent Study)August 2010

2. THE INDIAN HATCHBACK Participants A Segment B Segment B+ Segment The Way Forward8/7/2011THE INDIAN HATCHBACK 2 3. A hatchback is an automobile designed such that the boot is integrated with the cabin space. ChevroletFiatFord HondaHyundai Spark Santro Aveo U-VA Grande Punto Figo Jazz i10 Beat i20Maruti SuzukiNissan Skoda TataVolkswagen 800 Alto A-Star Nano Micra Fabia Polo WagonR Indica Vista Zen Estilo Ritz Swift 8/7/2011THE INDIAN HATCHBACK 3 4. The A-Segment covers entry level hatchbacks. These cars make for great city drives and are the firststepping stones for people graduating to cars. They usually feature sub 1 liter engines, are under 4mlong and are priced between 1 to 3 lakh Rupees. Competitors The Maruti Suzuki Alto The Maruti 800 was the carThe Tata Nano, the cheapest succeeded the Maruti 800 asthat brought 4 wheels tocar in the world, has the king of hatches. The car India. It retains a strongdefinitely generated a lot of continues to be a favorite emotional relationship with interest. Waiting periods ran with buyers, as it continues the customers and continues into months as the public to clock the highest sales to woe its faithful followers.queued up for a piece of the figures across segments. Nano pie. 8/7/2011THE INDIAN HATCHBACK4 5. Despite featuring only three cars, the A Segment accounts for 25% of total hatchback sales.Source: Press Releases8/7/2011THE INDIAN HATCHBACK5 6. Value-for-money is the key to success in this price-sensitive segment. Fewer variants are offeredwith concerted efforts to keep base pricing as low as possible.Note: 1Ex-Showroom Price (Delhi) as on 7th August 20108/7/2011 THE INDIAN HATCHBACK 6 7. The small engines and low weights allow these cars to be very efficient.Source: Society of Indian Automobiles Manufacturers (SIAM)8/7/2011THE INDIAN HATCHBACK 7 8. Source: Company Websites 8/7/2011THE INDIAN HATCHBACK 8 9. The entry level hatchback segment has been ruled by Maruti for decades now. But the Tata Nano has been able to rake in very good numbers as well. As customer confidence grows in the Nano, one can expect better sales. Keeping the vehicle well priced, for the very price-sensitive entry level, is the key to initial success. Keeping the ownership costs low, in the form of maintenance , spares cost, and efficiency is again of prime importance. Buyers in this segment would rather compromise on interior quality, ride comfort, and driving pleasure, than on the price, space and the VFM factor. Having a well-established service network helps alleviate maintenance worries, which are a carry forward from the 80s and 90s. Honda is developing an A segment offeringUpcoming Bajaj and Renault-Nissan are developing a 1 lakh INR car to counter the NanoLaunches Maruti might launch the Cervo in 2011 Hyundai plans to launch an 800 cc car in 2012 8/7/2011THE INDIAN HATCHBACK 9 10. The B-Segment covers above entry-level hatchbacks. These cars perform best during city drives andafford most creature comforts deemed necessary by todays customer. They usually feature 1 to 1.2liter engines and are priced between 3 to 5 lakh Rupees. Competitors The Spark, a rebadged Matiz,The Beat was launched byi10 has been a raging success, has created steady sales forChevrolet with the hope thattaking off from where the the last few years. The looks it would change their Santro left. It is the market make it a favorite with fortunes. While that hasnt benchmark for quality and women and the maintenance happened, the Beat haspracticality. It has really packages make for a value definitely generated interest strengthened Hyundais offering. with its unique design. position in India. 8/7/2011THE INDIAN HATCHBACK10 11. Santro, the victor of the The Indica Vista was ahatchback war of 1998, haswelcome change from theseen many successful years. erstwhile Indica. With anEven though the car is simply effort to move away from theoutdated now, it continues to taxi image, Tata gave it a newsell decent, new style and tried togive it a personal car touch.The Wagon R has alwaysbeen hugely popular in India.With its new avatar, a newengine, new interiors it justgot better. Being the charttopper for July is no surprise.8/7/2011THE INDIAN HATCHBACK11 12. A Star, or the Alto to the restThe second generation of the of the world, was the car that Zen Estilo saw it losing some introduced us to the K10 of the character it was earlier engine which powers all Acriticized for. Although, it still and B segment cars for does not rake in huge Maruti today. The pricey car numbers, it is a respectable has not seen chart burning performer as far as sales are sales. concerned.8/7/2011 THE INDIAN HATCHBACK12 13. The B-Segment cars post sales of about 60,000 units every month! Launch of the new Wagon R propelled salesSource: Press Releases8/7/2011 THE INDIAN HATCHBACK13 14. Companies offer a large range of variants, from basic to luxury, to target a larger audience.Note: 1Ex-Showroom Price (Delhi) as on 7th August 2010 15. Most B segment cars are tuned with a focus on efficiency.Source: Society of Indian Automobiles Manufacturers (SIAM)8/7/2011THE INDIAN HATCHBACK 15 16. Source: Company Websites 8/7/2011THE INDIAN HATCHBACK 16 17. Dominated by Maruti, with 4 offerings in the segment including the recently launched Alto K10, the B segment is a lucrative market to tap. This segment has seen quite a bit of activity recently. The keys to success remain the same as with the A segment, with fuel efficiency and reliability taking the crown. Customers look for a few creature comforts as well, and good interiors coupled with a stylish design can pull in the younger buyer. Mostly these cars find use in the city, hence ease of driving and good efficiency are a big advantage. The general absence of diesels in this segment can be one of the ways to enter the market. The bottleneck remains the cost of development and deployment for small capacity diesels. Fiat Indias small carUpcoming Hyundai i10 and Santro dieselsLaunches Volkswagen UP 8/7/2011THE INDIAN HATCHBACK 17 18. The B+ Segment covers the entire range of premium hatchbacks. These cars are just at home on thehighway as they are in the city. Most new hatchbacks are launched in this segment. They usuallyfeature engines above 1.2 liter and are priced between 4 to 7 lakh Rupees. Undoubtedly, with theIndian buyer getting richer, the B+ segment is where all the action is. Competitors The Ritz was launched in MayThe Swift has been a rage ini20, Hyundais offering in the 2009 as a conservativeIndia ever since its launch. AB+ Segment, has introduced alternative to the hugely powerful yet fuel-efficient car the Indian middle class to popular Swift. The car hasthat meets everyones quality. With interiors shaming been well-received despiterequirements; the Swift cars two segments above, the the oddball rear as it proves makes up for almost half thecosmopolitan Indian is ready to be a practical choice. cars sold in this pay the premium. 8/7/2011THE INDIAN HATCHBACK18 19. Chevrolets initial attempt toFigo, Fords latest offering, hascapture the market, in thecertainly created a blast in theform of the Aveo U-VA,market. The car is viewed aspretty much failed. The car value-for-money and has beenwas never bang-for-buck,clocking more numbers thandespite its roomy interiors the rest of the Ford lineupand well-sorted ride. combined. The Grande Punto rescued Fiat in Europe. It hasnt been able to do the same in India yet. The beautiful car does well on most counts, but Fiats old reputation is an albatross around its neck.8/7/2011 THE INDIAN HATCHBACK19 20. The Polo had been the mostHondas Jazz is another carlooked forward to launch this that has seen very poor salesyear, and it didnt disappoint. owing to its irrational pricing.Offering the hatch buyers a With most SUVs comingshot at owning a real cheaper, the space salesGerman car; Polo saw heavypoint never really struck abookings, but few deliveries. chord with the public.Skodas Fabia was never anumbers player in themarket.Marredbyunfortunate glitches and aninflated price tag, thisdeserving car never reallytook off.8/7/2011 THE INDIAN HATCHBACK20 21. The B+ Segment is attracting all companies, with almost all fighting for a piece of the premiumhatchback pie.Figo moved to the2nd place within amonth of its launch.Source: Press Releases8/7/2011 THE INDIAN HATCHBACK 21 22. B+ segment car prices often compete with entry level sedans.Note: 1Ex-Showroom Price (Delhi) as on 7th August 2010 23. Diesel hatches are favorites for people looking for economical long-distance city rides.Note: 1Ex-Showroom Price (Delhi) as on 7th August 20108/7/2011 THE INDIAN HATCHBACK23 24. Hyundais Kappa engine leads the pack in fuel efficiency.Source: Society of Indian Automobiles Manufacturers (SIAM)8/7/2011THE INDIAN HATCHBACK 24 25. The premium diesels offer stunning fuel efficiency coupled with the low cost of fuel.Source: Society of Indian Automobiles Manufacturers (SIAM)8/7/2011THE INDIAN HATCHBACK25 26. Source: Company Websites 8/7/2011THE INDIAN HATCHBACK 26 27. Source: Company Websites 8/7/2011THE INDIAN HATCHBACK 27 28. The B+ segment is where all the action is. Maruti again maintains a strong hold with its dual offerings: Swift and Ritz. The customer here is usually buying his second car, specifically for the city, or is an experienced buyer. Important factors can range from exclusivity, premium image to practicality and reliability. With a wide range of customer audience, positioning of the vehicle vis-a-vis the right customer bucket is essential for success. This diversity is illustrated by the success of Ritz, Swift and Figo which play on the VFM factor. On the same level, premium offerings like the Polo and i20 are tapping into the market share as