Even as poor consumer sentiment gripped the auto industry, with demand falling to a two-decade low, 2019 was evidently a year of new car launches, sales of which grew much more than the existing models, thanks to the latest connectivity features and bolder designs.
Many new cars surpassed the sales of the models which were segment leaders and in some cases had been in the market for over five years. For instance, the compact SUV Seltos launched by new entrant Kia Motors in August outsold Maruti’s Vitara Brezza which was the segment leader for over three years, within two months of its launch.
Monthly volumes of Seltos kicked off with around 6,000 units in August and touched the 14,000 mark in November, while Brezza sales averaged at around 10,000 units. Manohar Bhatt, V-P & head of sales and marketing at Kia Motors India, said Seltos not only achieved good sales numbers but also received appreciation from several automotive experts. "2019 has been an outstanding year for the company with respect to everything around Seltos," Bhatt said.
Hyundai's compact SUV Venue, which was rolled out in May, gave the competitors a run for their money, with monthly sales averaging at about 9,000 units since launch. This was much ahead of models like Maruti S-Cross, Ford EcoSport, Renault Duster and Honda WR-V, among others, which have been present in the market for around five years. SS Kim, managing director at Hyundai Motor India, said with the new launches, consumers start rethinking if they have planned to hold the purchase. "The reason why we chose to launch all new models during the downturn was because this is exactly the time to excite customers with differentiated products. Customers who postpone their purchase get a reason to visit showrooms again," Kim told FE.
Maruti Suzuki's small car S-Presso, which was launched in September, touched the 10,000-mark within a month, surpassing competitors like Renault Kwid, Hyundai Santro, Tata Tiago and Datsun redi-Go, with a wide margin of over 50%. Renault's Triber launched in August soon went ahead of the existing cars like Ford EcoSport, Honda BR-V and its own vehicle Duster, with average monthly sales of over 4,500 units. Mahindra's compact SUV XUV300 also averaged around 4,000 units since its launch in February, outpacing several competitors. A total of around 20 cars were launched in 2019, of which a dozen were new while the remaining were upgrades of the existing models.
Experts said new age technology and comfort features including ventilated front seats, sunroof, better quality music systems and 360-degree camera attracted consumers, some of which were lacking in the older models. Besides, the quest to look different on the road by driving new brand boosted sales of newer models at a time when the passenger vehicle industry is going through a prolonged slowdown.
The passenger vehicle industry is going through one of the worst slowdowns in two decades, with sales falling virtually every month in double digits since the second half of 2018 on account on rise in prices and costlier finance options. Total car sales during the first eight months of this fiscal (April-November 2019) fell 18% year-on-year (y-o-y). In FY19 too, car sales grew by a mere 2.7%, slowest in last seven fiscal years, when volumes grew in the range of
Manufacturers who launched new products also gained market share. "Hyundai and Kia have gained 160 bps and 210 bps y-o-y so far this fiscal, respectively, led by new SUV launches," analysts at CLSA noted. Anlaysts at Axis capital believe there will be a competitive intensity in the industry over the next 2-3 years driven by slew of new launches by new entrants, alongwith the existing new manufacturers Kia Motors and MG Motor. "New model launch pipeline shows a clear trend of OEMs focusing on SUV segment given increasing customer preference and relatively-fragmented market," they wrote.