Motown puts brakes on new launches as sales cool

Written by Roudra Bhattacharya | New Delhi | Updated: Jul 10 2013, 17:00pm hrs
MotownMotown puts brakes on new launches as sales cool
WITH demand for cars falling and companies cutting back on production, new launches have also taken a hit. Car manufacturers are deferring new models; as such, 2013 might see the fewest launches in the last three years. Launches planned for this year are set to drop 30% to just 21, from 30 in 2012 and 36 in 2011.

Market leader Maruti Suzuki has no new car to offer this year; just some special editions and a face-lift for the SX4. Marutis next new car will roll out only early next year a small car replacing the A-Star and Estilo. Rivals Tata Motors, Toyota Kirloskar, Renault and Volkswagen too do not have any new launches planned for 2013.

Companies have pushed some launches to next year and indefinitely delayed others due to lower demand as well as to reduce fresh expenditure. Honda has put the launch of the new Civic on hold, while pushing the new Accord launch for later.

The new Toyota Corolla is expected only next year. Marutis new compact SUV shown at the Delhi Auto Expo 2012 and was expected to be launched in 2014, may roll out only in 2015.

Last years big-ticket launches included Marutis Alto 800, Dzire and Ertiga, Renault Duster and Mahindra Quanto. In comparison, 2013 has only three major launches expected to rake in the volumes. The first two Honda Amaze and the Ford EcoSport are already on the roads, while the third a new Hyundai hatchback (Code: BA) between the i10 and i20 is expected during the festival season.

Companies are targeting their marketing spends more on parent brands this year rather than adding new product brands. Also, the focus is to build on the products already launched in the last two years, said Rakesh Srivastava, senior vice-president for marketing & sales at Hyundai Motor India.

Explained Puneet Gupta, principal analyst at IHS Automotive: The key reason is that the economy is going through bad times. Footfalls are low; so even if you launch a new product, it may not get the desired volumes and it takes a lot of money to develop and launch a new car.

Stocks at dealers are high; so, there may not be space to add new cars, said VG Ramakrishnan, MD at Frost & Sullivan.

Advertising spends by auto companies stood at R1,984 crore in 2012, and are expected to drop sharply on fewer launches and as companies look to increase spends on cheaper avenues like online, instead of traditional media like TV.

Lower demand has also led to a build-up of inventory with the company and the dealers, which have necessitated production cuts across the industry since January this year. Maruti in June cut production by 25% versus last year and 40% versus its full capacity, while Tata Motors cut output of the Nano by 80% and other models by 30-40%.