Japanese, European and Korean car makers have a new battleground for their super-premium cars: India.
So far, Honda and Toyota have dominated this small market of 5,500 cars with a combined 72 per cent share. From this year, they’ll face tough competition from Europe and renewed aggression from the Koreans.
The new competitors on the block are the new version of SkodaAuto’s Superb, Volkswagen’s Passat, and Hyundai’s Sonata Transform. Significantly, all of them are positioning themselves as value-for-money challengers in this market (which saw flat sales growth last year), where prices range from Rs 17 lakh to Rs 24 lakh.
The new launches from Europe and Korea are already being felt. Skoda’s Superb, for instance, has increased its share from just 9.8 per cent last year to 17 per cent in the first two months of this year. In the same period, Honda has seen its market share fall from 62 per cent to 52 per cent.
| MARKET TRACK (Market share in %) | ||||
| Company | 2006 | 2007 | 2008 | 2009* |
| Skoda | 16 | 12 | 10 | 19 |
| Honda | 54 | 56 | 69 | 58 |
| Toyota | 20 | 19 | 13 | 5 |
| Volkswagen | 12 | 13 | ||
| * 2 months Note: Calendar years Source: SIAM and industry Photos: Reuters | ||||
A fresh salvo was fired this month by SkodaAuto. It has just launched a new version of the petrol Superb with a 1.79 litre engine, priced at Rs 18.4 lakh. That’s nearly Rs 2 lakh less than the earlier model withdrawn this year, which had a heavier, 2.8 litre, engine. Price-wise, this new one is clearly positioned against the Honda Accord, currently the largest-selling in this market. The Accord is priced between Rs 17 lakh and Rs 18 lakh (but has a 2.4 litre engine).
Dealers say the new Superb offers 9-10 km per litre (kmpl), against 7-8 km for the Accord, has a higher top speed of 220 km an hour (200 kmph for the Accord), though it has lower BHP of 160 (to Accord’s 180). And it has swanky interiors in wood, chrome and leather, plus an electric sunroof and ample luggage space.
Skoda has an aggressive sales target for the calendar year: it hopes to double Superb sales to 1,000, against the 520 it sold last year. "The Superb is aggressively priced and with the features, it will make a dent in the Accord market," said a competing auto company that operates in the premium segment.
Skoda is also launching a new diesel version of the Superb in one or two months. Neither Honda nor Toyota has competing products. With a 2-litre common rail TDI engine, the new diesel is expected to be at least Rs 1-1.5 lakh cheaper than the heavier and less-refined diesel Superb sold earlier (at Rs 23 lakh ), now withdrawn. And, it will deliver 15-16 kmpl against the 10-11 kmpl in the outgoing Superb.
“We launched the petrol model first because we wanted to capture the petrol market,” said Thomas Kuehl, member of the board, sales and marketing, SkodaAuto India. “The TDI has helped us build sales in India (in other models) and we will have it in the new Superb soon.”
Volkswagen’s Passat is also being positioned as a value-for-money car, combining power and fuel efficiency — it used to be a uniquely Japanese strategy. In February, the company replaced the Passat fired by a diesel TDI engine with the more contemporary 2-litre common rail engine, but kept the price unchanged at Rs 25 lakh. The car offers 11-12 kmpl in city conditions and as much as 15 kmpl on highways. None of the petrol Japanese cars can match this. It also has a top speed of 216 kmph.
“The Passat will sell more as we increase the number of dealers, from 14 today to 40 by the end of the year,” said Kurt Rippholz, head-Volkswagen India Brand Communications.
Rippholz concedes the car, assembled in India, may be more expensive, but says it has better resale value than its competitors. “It also provides savings in fuel efficiency, so the overall savings for an owner are higher,” he added. He is clear that the company will not look at manufacturing the car in India to reduce prices. But it is Korea’s Hyundai that is positioning itself most aggressively as the price warrior, through the new Sonata Transform launched this January.
The diesel option, with a 2.0 litre engine, is available at under Rs 17 lakh. Without changing the fuel economy, the company has increased the power in the new model by around 6 per cent, pricing it by an extra Rs 1 lakh-plus. The petrol version of the Sonata Transform has seen a similar transformation.
“With the competitive pricing of the Sonata Transform, we expect to sell at least 2,000 units by the end of the year,” said Ashok Jha, president, Hyundai Motor India. Honda, which has seen its market share dip over recent months to these new challengers, says it isn’t deterred. It hopes to sell 200 to 250 units of the Accord per month; it sold about 282 cars every month last year. And, from this Monday, the company raised the Accord’s price by a hefty Rs 100,000, saying the cost of imported components, 75 per cent of the car’s cost, have increased.
“We agree that we lack a diesel option but Honda enjoys a strong brand name in India that the competitors don’t have,” says Jnaneswar Sen, vice president - marketing, Honda Siel Cars India Ltd (HSCI). Instead, it has just launched the new Accord (V6) with a 3.5 litre petrol engine, priced at Rs 25 lakh — nearly the same as the Passat, and positioned as its petrol alternative.
“This car is positioned for customers who were looking for more power from the Honda stable. It is the most powerful Accord model ever,” said Masahiro Takedagawa, president of Honda Siel.
Unlike the Passat, the car offers only 6 kmpl, according to dealers, but provides over 275 BHP. This car will have an intelligent variable cylinder management system that switches between six four and three cylinders, depending on driving conditions. Apart from six airbags, the car will also have paddle shift, just like F1 cars.
Meanwhile, Toyota is facing different challenges Sales for its Camry have dropped between April 2008 and February 2009 to 473 units against 906 units in the same period the year before. Toyota imports the Camry, attracting 110 per cent import duty, which effectively doubles the price. The Camry is priced at Rs 21-22 lakh ex-showroom, Mumbai.
“Demand has not dried up, but has gone down significantly. One of the main challenges the Camry faces is the high import duty, since it continues to be a fully imported model,” conceded Sandeep Singh, deputy managing director (sales and marketing), Toyota Kirloskar Motors. All the same, the company has no plans to assemble the premium car in India and has decided not to focus on this segment for now.
