Market-shares of Car makers - How things have changed over last 1 year.

There quite a few positives for Automobile manufacturers in the current period. Firstly the Rainfall has been good this year, which has infused optimism in the overall economic atmosphere in the country. Secondly, the Govt. has announced 7th Pay Commission for it's employees & people are again set to get healthy arrears. Even Ex-servicemen are getting their OROP arrears this year. Add to all this, the prime festive period of Navaratri to Diwali has arrived a couple of weeks early this year, compared to last year.

Most of the leading 2-wheeler makers have been reporting over 20% Y-o-Y Growth in dispatches since the last few months. The Car makers too have seen Total Sales increase by nearly 18% Y-o-Y in the recently-ended Q2 of current fiscal, after reporting single-digit growth in Q1. In order to understand who all have Gained & who all have Lost in the race for Market-share over the last 1 year, I have arranged the Quarterly

Market-share Data of all Car Makers in India (Excluding the Luxury Car Makers). There have been quite a few Surprises & changes in market-share Rankings over the last 1 year. The most prominent one being the rise of Renault-Nissan Alliance moving up from No.9 position in Q2 of last fiscal to No.4 position in Q2 of current fiscal. The primary reason for this rise has been the stupendous success of Renault's small car KWID, which was launched around the end of September'2015. The KWID helped increase Renault-Nissan's market share from under 2% in Q2-FY'16 to around 4.70% in the following quarter. And the market-share has kept improving with every passing quarter till now. Renault's KWID got some assistance from Datsun's Redigo in the recent few months. It will be interesting to see if Renault-Nissan Alliance is able to build on this 12-months of success and progress towards being a strong No.3 player in the Indian Car Market.

The next big surprise is Maruti-Suzuki's Sales resilience. Despite all the incremental competition from Renault-Nissan or Ford or Hyundai or Tata or others, Maruti Suzuki has seen it's market-share remain steady around the 47-48% range. It's Q2-FY'17 market-share being slightly higher than Q2-FY'16 suggests that Maruti-Suzuki managed to grow it's Sales during the period slightly faster than Industry growth. Yes, it's ALTO model did take some hit from KWID, but the drop in volumes was just about 10% or so. This was more than compensated by success achieved by Maruti Suzuki's new launches of the BALENO and the VITARA BREZZA and also the CIAZ. All these three models are near the upper-end of Maruti-Suzuki's model portfolio and hence their success means a lot more to the company than the small drop in sales of it's ALTO model. Both the BALENO and the BREZZA are currently commanding a waiting period of almost 3 to 5 months, which is making the company even more desperate to see Suzuki's Gujarat plant being commissioned, which is expected to happen sometime in 2017.

The next surprise is Honda's struggle for Volumes, which started in November'2015. Since then the company has been saying that it has slowed down dispatches of Diesel versions of it's Car models as there has been an inventory pile-up at dealer level due to slower demand for the same. But it's been nearly 11 months since then and Honda's volumes are still nowhere near normal, though there has been slight recovery in numbers due to BRV launch a few months ago. Honda reported a 28% Y-o-Y drop in volumes during Q1 of this fiscal, which was followed by about 18% Y-o-Y drop in volumes in Q2. This massive under-performance resulted in Honda's quarterly market-share dropping by nearly 250 bps in Q2 of this fiscal, compared to a year-ago period. Honda lost it's No.3 position during this period and is now at No.5, which too is under threat from a resurging Tata Motors.

The next point is Mahindra & Mahindra's lacklustre show despite several new potentially volume-generating launches over the last 12 months. M&M's market-share improved from 7.2% in Q2-FY'16 to 9.45% in Q4-FY'16, primarily on the back of 2 new launches in the Compact SUV space: the TUV300 and the KUV100. But both these models have failed to hold volumes beyond the initial couple of months, despite good marketing & promotional support. The NuvoSport, which was introduced later, was an even bigger dud in terms of volumes. M&M will again be pinning it's hopes on the refreshed & slightly-shorter version of the BOLERO to bring increased volumes for the company. Since the BOLERO now confirms to the Compact segment restrictions, it is cheaper by nearly Rs.1 lakh compared to the previous model. Hence it is now even better value-for-money than before and hence has good chances of being successful. M&M has managed to grab & hold the No.3 position since Q3-FY'16, but it needs to do better to continue holding the rank.

Coming to rest of the car makers, the No.2 Rank holder Hyundai has done a fine job through most of the year, but posted slower growth in latest quarter, resulting in slight erosion in market-share. Seems like Hyundai's ELITE i20 and the CRETA models are losing some steam in the face of increased competition. Tata Motors too has finally found success with it's TIAGO model, which is currently commanding a waiting-period of 2 to 3 months. The company is ramping up production at a measured pace and hence we haven't seen it's volumes shoot up suddenly. At the same time Tata Motors has another 2 to 3 new models lined up for launch, spread over the next 12 months, which should boost the company's image as well as market position in the coming quarters. Toyota continues to remain dependent on it's INNOVA model for volumes & market-share, which has remained more or less steady, even after the launch of the new generation INNOVA. The company has also refreshed the ETIOS siblings with a hope of finding more volumes.

Ford and Volkswagen have also gone nowhere in terms of market-share over the year. Ford did launch it's brand new Compact Sedan the ASPIRE and the new generation FIGO late last year. Everyone expected Ford to improve it's market-share with these new models. But it's been a big surprise to see both these capable models to do lacklustre volumes, while Ford's ECOSPORT continues to generate decent monthly volumes, despite increased competition in the Compact SUV space. Volkswagen group has only recently got slightly ambitious for increased domestic volumes.Volkswagen worked on it's POLO/VENTO platform and has introduced the AMEO compact sedan recently, which it hopes will help boost it's volumes to some extent. The result for the same is yet to be seen.

Compact Cars - Sales Analysis.

About 14 different Car/SUV manufacturers (or Brands), producing close to a 100 different models, sold about 2.8 million units over the last 12 months. Out of them 13 Brands offers about 41 different models in the Compact Category, which comprises of vehicles under 4000 mm in length and powered by a Petrol engine of < 1200 cc or a Diesel engine of < 1500 cc. This Category was specially created by the Indian Govt. about a decade ago by offering substantial Tax-concessions to vehicles meeting the above mentioned specifications. The year when this concession was announced, only the Hatchback cars or Small Cars belonged to this Category. Tata Motors was the first to launch a Compact Sedan in the form of an Indigo CS, with a shortened boot. The tremendous success of this model pushed even Maruti Suzuki and a few other manufacturers to trim the rear end of their popular Mid-size Sedans in the following years. This trend continues even today when we see Volkswagen recently announcing the launch of it's Ameo compact sedan, which is a shortened Vento!!

Over the last few years we have seen Car manufacturers come up with models specially designed to meet the regulations of the Compact Category and we now have 41 different models involving Hatchbacks, Compact Sedans and even a few Compact SUVs. It was not just about the vehicle's length. Some manufacturers even had to develop new engines to meet the 1200 cc Petrol / 1500 cc Diesel restrictions. Mahindra & Mahindra too, which was primarily into full size SUV & MUV space, created a downsized 1500 cc diesel engine to power it's downsized Xylo (called the Quanto) for it's maiden entry into the Compact Category. This model did not do much for the company. But M&M still launched a brand new Compact SUV, a micro-SUV and a re-designed Quanto last year to increase it's market share in the Compact Category.

The products in the Compact Category now span a price range of Rs.2 lakhs to Rs.10 lakhs, with the Nano, RediGo & Kwid near the lower-end

of the range and cars & SUVs like Polo GT, EcoSport, i20, etc. at the higher-end of the range. It goes without saying that Maruti Suzuki is a dominant player in this Category. This company has a total of 10 different models competing in the Compact Category, with Total Average Quarterly sales of just under 3,00,000 units. The two most popular models in Maruti Suzuki's portfolio are the Alto and the Swift Dzire, which together sell more than India's No.2 manufacturer Hyundai's Total sales in the Compact Category. That is the kind of domination Maruti Suzuki has in the Compact Category. It's market share has comfortably remained over 55% in each of the last 4 quarters, with the highest level achieved being 59.4% in Q3 of last Calendar Year.

Hyundai's Total Average Quarterly sales over the last 4 quarters stood at just under 1,00,000 units, with it's market share in this category hovering around the 18-19% level, the highest level achieved being 20.5% in Q4-CY'15, which included the festive season. The two most popular models from Hyundai's portfolio here are Grand i10 and the i20, which contribute over 70% of the company's Total sales in this Category.

The fastest growing manufacturer in the Compact Category is the Renault-Nissan Alliance, which also includes the Datsun brand. The stupendous growth of this Alliance started with the launch of the Renault Kwid just before the start of the

festive season last year. This model single-handedly brought the Renault-Nissan Alliance from a No.7 position in Q3-CY'15 to a comfortable No.3 position in Q2-CY'16. From sales of about 6700 units in Q3-CY'15 for Renault-Nissan Alliance, it has multiplied over 5 times to reach around 35,500 units in Q2-CY'16, with the Kwid alone contributing close to 25,000 units in the latest quarter. During this period, the market share of the Renault-Nissan Alliance jumped from a meagre 1.4% to a respectable 6.9%. In June'16, the Alliance has launched another potential volume boosting model, the Datsun RediGo. It's impact will be noticeable in the coming quarters.

Tata Motors has seen mixed fortunes during the last 4 quarters. It started with No.4 position & 5.8% market share. Then saw it's sales & market share dip for the next 2 quarters and even lost one position during Q1-CY'16, but has seen a sales & market share bounce back in latest quarter and now Tata Motors is now back to No.4 position in the Compact Category. The recovery in sales in Q2-CY'16 is completely attributable to the Tiago, which was launched in April this year. With 2 more new model launches lined up for the Compact Category from Tata Motors over the next 2-3 quarters, it will be interesting to see how the company manages to build on this sales momentum.

The No.5 position continues to be held by the American auto giant, Ford Motor. This company did not see much change in fortune despite the launch of brand new compact sedan the Figo Aspire in August last year, which was followed by it's hatchback variant Figo in September. The sales of both these models dropped to disappointing levels after the initial couple of months of launch. The company was mainly relying on it's compact SUV model EcoSport to bring in some decent numbers every month. Ford has launched a completely new marketing push for it's models in the month of May this year. The result was immediately visible with a substantial jump in dispatch numbers during June'16. This last-month jump helped Ford to recapture the No.5 position in Q2-CY'16, which it had lost briefly during the previous quarter.

The next in line is India's own SUV maker, M&M. It was virtually non-existent in this category until the launch of the newly developed TUV300 in October'15. It brought in respectable volumes in the initial few months & then the company followed it up with the launch of the micro-SUV model, the KUV100 in January this year. With KUV100 in the picture, the sales of the TUV300 started losing steam. M&M did manage to grab a peak market share of 4.5% and the No.5 position during Q1-CY'16, but is already showing some signs of weakness in sales with market share dropping to 3.8% in the latest quarter. M&M too needs to push it's marketing team to come up with a new aggressive campaign to rekindle the customer interest in it's relatively new models.

Honda has had exactly opposite fortune to that of Renault-Nissan Alliance over the last 4 quarters. From being a comfortable No.3 player with 6.9% market share in Q3-CY'15, Honda has seen its sales & market share drop substantially over the last 3 quarters. The biggest drop coming in the latest quarter, when Honda's market share has fallen to just 2.4% in the Compact Category. One really wonders as to how come a company with a brand name as strong as Honda and equipped with a decent product portfolio, is suffering so badly in the recent months. The company is saying that it has deliberately curtailed dispatches to allow the dealer-level inventory (mainly of Diesel cars) to be cleared first. That means the dispatch numbers in the previous quarters were piling up at the dealer level. Honda has reached this fate despite having launched a brand new Jazz and an updated Amaze last year.

Apart from these 7 manufacturers, Volkswagen, Toyota, Chevrolet & Fiat are also present in this category with 1 or 2 models each. But their combined market share is less than 3% currently. Volkswagen has recently launched the Ameo compact sedan, while Chevrolet too is planning to bring an updated Beat and it's compact sedan version too. Let's see if these new launches help their respective manufacturers to improve their market share to levels worth mentioning in the coming quarters.