Had it not been a string of new launches by manufacturers like Maruti Suzuki, Hyundai, M&M and Renault, the sales of passenger vehicles would not have seen a growth of 7.24% in FY16 — a five-year high — but contracted by 4.14%.
Further, only market leader Maruti Suzuki would have seen sales growing had it not been for new launch of new models with Hyundai be close second with flattish sales.
The total volume sales during FY16 stood at 2.79 million of which 296,000 was contributed by new launches. This is 10.6% of the overall sales.
From among the notable launches in the year only three models, Maruti's Baleno, Hyundai Creta and Renault Kwid were able to sell over 5,000 units on a monthly average. Other three models, M&M's TUV300, KUV100 and Honda Jazz were able to sell over 3,000 units on average. The models that could not generate significant excitement in the market included Maruti S-Cross, Ford Aspire and Figo, and volumes for these models remained below 3,000 units a month.
“The year 2015-16 has been different. The offerings from car-makers have been loaded with features that too at attractive prices. Moreover, customer behaviour and aspirations are changing and people are looking at a product for 4-5 years unlike the earlier trend of 8-10 years,” Abdul Majeed, partner at Price WaterHouse said. “In the year 2014-15, the number of launches as well as its contribution to total sales was lower,” he said.
For over two years car-makers have struggled with muted demand in the domestic market. Moreover, rural and semi-urban markets, which bring in over one-third of volumes for entry level models, have been hit by two consecutive monsoon failures. The fall in demand for small cars is notable as Maruti's entry level portfolio saw a growth of just 1.7% in 2015-16 while the compact segment grew close to 10% and utility vehicles 38%.
While most of the launches during the year were in the utility vehicle and compact segments, Renault Kwid was the only one to launch in the entry-level segment during the year. It has a huge potential as other popular models in the segment have the baggage of being old models, analysts said. “If Renault can make sure to meet the demand and expand its reach at the same time, it can easily gain more from the Kwid,” Majeed said.