Sedan demand plummets amid rising fuel prices

Sales fall 22% in the April-July period, much higher than under 10% fall seen in passenger car segment

From being a hot favourite barely a year ago, sedans seem to have lost their lustre. With fuel prices refusing to cool, buyers have begun shunning mid-size and executive sedans and are gravitating towards the smaller, more fuel-efficient hatchbacks.

According to data from the Society of Indian Automobile Manufacturers (Siam), sales of sedans fell 22 per cent in April-July this year to 61,451 units in the domestic market, compared with 78,807 units in the same period last year.

The dip in mid-size and executive sedan sales is much higher than the industry-wide decline of under 10 per cent in the passenger car segment in the same period.

Market leader in the mid-size segment Hyundai, which has a share of nearly 31 per cent, reported a steep drop of 26 per cent during the reporting period. From an average of 4,800 units a month, Hyundai’s Verna sales declined to less than 3,500 units in July.

Nissan Sunny, another new product in the segment, was the worst performer with sales declining 68 per cent during the period. At just 367 units, Sunny sales slumped 85 per cent in July, against 2,436 units sold in July 2012.

The mid-size and executive sedans segment was a hotbed for new launches for almost all companies in the last couple of years. In addition to the Hyundai Verna and Nissan Sunny, the segment saw launches of General Motors’ Chevrolet Sail, the new Maruti Suzuki SX4, Renault Scala, Skoda Rapid and Tata Motors’ new Manza. Despite several company- and dealer-backed discounts and consumer benefit schemes, buyers switched to other segments. Premium hatchbacks, smaller sedans with cheaper price tags and compact sports utility vehicles (SUVs) pulled buyers of the mid-size and executive sedans.

Larger and heavier body resulting in more fuel consumption and parking hassles in addition to high purchase costs also resulted in the decline of demand for sedans.

In comparison, the demand for Maruti Suzuki's compact sedan, DZire, grew by 11 per cent selling more than 16,000 units a month, while Honda's new Amaze compact sedan is clocking nearly 6,000 units a month. Ford Motor Company's EcoSport, a compact urban-centric SUV, is clocking sales in excess of 4,500 units every month.

“In a slowdown, the segment with higher ticket value gets impacted the most and so that is what is happening with the mid-size and executive sedan segment. Buyers are downtrading or holding back purchases. But reducing visibility and spends will be an even more damaging thing to do. We need continued effort on marketing,” said a senior executive of a Delhi-based car manufacturer.