 "Tough going for Volkswagen and General Motors")
General Motors India (GM) had set for itself the target of nine per cent share by December, 2013. With the launch of its multi-passenger vehicle, Enjoy, it has seen a growth of around 40 per cent in month-on-month sales in May, 2013. Even then, slack demand for the rest of its Chevrolet range, makes its target a tall task. The premium Czech auto brand, SkodaAuto (part of VW) had to phase out its only compact car in India, Fabia. The hatchback had been under-performing (it sold just 3,343 units last year) continuously, despite being sold since 2007 .
Notwithstanding an array of brands launched and backed by promotional blitzkrieg, foreign automotive companies like VW, GM and SkodaAuto have found it difficult to break the stranglehold of traditional automobile brands. As a result, these players have had to revise their market share targets. The total domestic passenger car market in 2012-13 spanned 2.68 million units.
Well-entrenched brands such as Maruti Suzuki (Maruti) and Mahindra & Mahindra (M&M) have been able to defend and increase market share.
Abdul Majeed, automotive leader at PWC India, explains what could have gone wrong: "India has been traditionally a small car market. Albeit, in the last one year, we have seen preference for larger cars. However, the early entrants have become well-versed with the market. You need three crucial factors to sell - the product mix, straddling different segments, the distribution and consistent communication across the network and finally, after-sales service. The second bunch of players who had entered the market seemed unsure at first on whether to go with small cars or not. That could have cost them time."
Some MNC players such as Honda Cars India and Toyota Kirloskar Motor have marginally improved their share on the back of new launches such as the Honda Amaze and the Toyota Etios and Etios Liva. The Korean Hyundai Motor India, one of the earliest MNCs to enter the Indian automobile market, has maintained its share so far, with a marginal decline.
Majeed notes, "The wrong product strategy can set an original equipment manufacturer (OEM) back in time. In India, which is seeing product launches number anywhere between 16 to 30 per year, it is imperative to have a continuous series of launches rather than a couple of launches. India will not allow an OEM to do well in the mid-long term with just one or two models, even if they do exceedingly well in the market. Companies have to be present in as many categories and justify their
value-for-money consistently over time and across markets to get ahead."
Both Maruti and Hyundai tap finer segmentation in compact cars, which accounted for 51 per cent in 2012-13, with different models. M&M, the utility vehicle leader, just launched its first compact car, the premium hatchback, Verito Vibe, to challenge Maruti which dominates the segment with the Swift. While, Mumbai-based Tata Motors has seen a constant erosion in market share due to an ageing product line-up.
Arvind Saxena, managing director, VW Passenger Cars and VW Group Sales India, says that new models don't always make for success. He is not looking at increasing but maintaining share this year.
GM is still waiting for its last year's launches (the Sail sedan and the hatchback Sail UVA ) to pick up in sales.
Car buyers opted to stay loyal to Maruti, India's largest car manufacturer, which had 40 per cent share last year. "New models from Maruti like the Ertiga and Alto 800 and popular brands like the Swift and Dzire have helped Maruti beat rivals. What has also helped the company is the perceptible consumer shift to traditionally reliable brands during a slowdown", an analyst with a Mumbai-based brokerage firm says. M&M, has benefited from a major diesel line-up amid rising petrol prices, substantially improving its market share
But Majeed points out that "it has been a learning curve for some players in the industry but the good news is none of them have given up on the market".
With inputs from Sayantani Kar