Competition in premium car segment: Here’s how sales of i20, Baleno, Ciaz & City stack up

With the launch of Maruti Suzuki’s premium hatchback Baleno and an upgraded premium sedan Ciaz, the competition in these segments is intensifying.

By: | Updated: May 7, 2016 8:43 AM
Maruti Suzuki Ciaz SHVS The Ciaz, launched as a soft-hybrid in September last year, has clocked volumes close to that of the City in the past few months, overtaking it in February.

With the launch of Maruti Suzuki’s premium hatchback Baleno and an upgraded premium sedan Ciaz, the competition in these segments is intensifying. The difference in sales volumes of top-selling products has narrowed significantly over the last few months. Maruti’s new offering Baleno overtook Hyundai’s Elite i20 by a narrow margin in April; the Elite was the market leader clocking over 8,000 units while the i20 Active — a crossover — sells around 1,800-2,000 units a month. While Baleno reported strong volumes in November and December last year, the car had just been launched and was expected to see good demand.

Meanwhile, the Honda City, the leader in the premium sedan space since January 2014, saw volumes taper from the peak of over 9,000 units a month in March 2015 to less than 6,000 units in April 2016. The Ciaz, launched as a soft-hybrid in September last year, has clocked volumes close to that of the City in the past few months, overtaking it in February. However, the City retained the top spot in March and April, though the gap remains small.

The Baleno appears to have hit Maruti’s Swift, sales of which have settled at around 14,000 units compared with 18,000 units a month before the launch of Baleno. The Maruti management said in March this year the risk of the Baleno cannibalising sales of the Swift was minimal given that it is the top-end variant of the Baleno that is more in demand. “For the Swift most inquiries are for the mid-variant while for the Baleno over 50% of the bookings are for the top-end variant. The difference in prices is quite wide and therefore there is limited cannibalisation,” the management had said in response to queries from analysts.

Nevertheless, even if the Baleno takes away some Swift volumes, the company is earning better realisations. For the January-March 2015-16 period, Maruti’s net realisations per unit saw a year-on-year jump of 8.1% to Rs 4.24 lakh from Rs 3.93 lakh. Analysts said that the margins are higher for a premium product.

Analysts believe the negative publicity around diesel cars has impacted some models such as the City. “Customers have become cautious since the uncertainty surrounding diesel could impact the resale value of the car,” Abdul Majeed, partner at Price Waterhouse said. Moreover, customer preference is also shifting from sedans to compact SUVs and premium hatchbacks due to paucity of parking spaces in urban areas, he said.

Gr8

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