Wednesday, January 08, 2014
By Kamal Swami
Hyundai, Tata Motors, Ford launching new sub-4 metre sedans to compete with Maruti Swift
Even as demand for utility vehicles is unlikely to abate in 2014, the Indian passenger vehicle market is expected to witness a strong resurgence from the sub-4 metre sedan segment, as newer models by Hyundai, Ford and Tata Motors are slated to be launched in the coming months. The sub-4 metre segment (Rs 5.52 to Rs 8.5 lakh) saw competition finally emerging when Honda Amaze was launched. It is expected to get more competitive with the South Korean car maker Hyundai Motor India readying to launch its sedan based on its successful Grand i10 platform. And close on the heels is Tata Motors, sub-4 metre X1 platform based compact sedan code-named Falcon 5 which will compete with other leading car makers to take on undisputed market leader Maruti Suzuki's Swift Dzire, which still continues to post record numbers.
Some of these new launches, will spill over to 2015, when Ford India (based on B562 platform) will join the fray with a sub-4 meter sedan and Tata Motors adds to its sub-4 metre portfolio by introducing a sedan based on the X0 platform. Volkswagen is also exploring the possibility of a sub-4 metre Vento.
Rakesh Srivastava, senior VP, sales and marketing, Hyundai Motor India says the sub-4 meter sedan segment is the first step up choice for the users of compact cars as it is very high on value proposition with aggressively priced products. "The segment has current volumes of 31,000 units a month and is growing in strong double digits. Hyundai with its strong performance in bigger sedan segment would like to have a sizeable presence as the new product would be a strong choice for any aspiring customer," added Srivastava, stating that the response to Grand i10, has given them the confidence.
Not surprisingly, post the launch of Amaze in 2013, the sub-4 metre sedan market grew by 27% against the compound annual growth rate of 8-10% from 2007-2012. With the launch of new cars from Hyundai and Tata Motors, the choice in the segment is set to widen further and the double digit growth is expected to continue. According to Tata Motors, the segment size has doubled in the last three years as increasing number of people want to own a car that offers them a boot space, but at an affordable price. "This segment will continue to grow rapidly and we will continue to have significant play here, with existing and new brands," said the Tata Motors spokesperson.
And if one includes the entry-level sedans like Toyota Etios, Mahindra Verito and Ford Classic, the compact sedan segment has grown even faster. According to data from IHS Automotive, a leading automotive consultancy the affordable sedans have grown substantially by 70% from 2 lakh units in 2012 to 3.4 lakh in 2013.
The consultancy however says, the compact sedan segment will face competition from compact SUV space. "The growth is expected to continue in 2014 and 2015 due to introduction of new models from Hyundai, Ford and Tata. However the growth rate may slowdown to single digit as on one side there is consumer shift from hatchbacks to sedans but simultaneously many sedan consumers are moving to compact SUV
segment," cautions Puneet Gupta, associate director, IHS Automotive.
The sub-4 metre sedan segment is unique to India and was created to meet the government's small car definition to avoid higher excise duty. The smaller sedan enjoys excise benefit over 12%-15% over bigger sedans. The segment today accounts for almost 15% of the overall car market and has found increasing number of buyers who want to upgrade from their small car to an affordable sedan.
While Tata Motors was the first to come out with a sub-4 meter Indigo CS (compact sedan), it was the market leader Maruti Suzuki with its Dzire that has ruled the segment since 2007. Over the last six years Maruti Suzuki has sold over 6.6 lakh Dzire and boasted a waiting list, before new capacity got commissioned.
Source: Economic Times