In FY14-17, the success rate of new launches in the two-wheeler segment stands at one out of 26 models, while in the passenger vehicle segment, it is a dismal eight out of 35 new launches.
In Autoville, launches and loyalty don’t quite go hand in hand. In FY14-17, the success rate of new launches in the two-wheeler segment stands at one out of 26 models, while in the passenger vehicle segment, it is a dismal eight out of 35 new launches, points out a study conducted by American institutional equity research firm Jefferies. Reason: Customer loyalty toward the existing models offset new launches by manufacturers across segments, who find it tough to consolidate their position. In the two-wheeler segment, only Jupiter — a scooter launched by TVS in 2013 — has been able to make it to the list of the top ten selling two-wheelers in the domestic market. Surprisingly, most of the other products in the list have existed in the market for at least a decade. Popular motorcycle Splendor was launched by Hero MotoCorp (then Hero Honda) in 1994 while Activa — the most successful automatic scooter in the country — was launched by the Honda in 2000.
From FY14-17, 10 scooters have been launched in the domestic market, while only one has been successful. In this period, the economy segment (90-125 cc) saw six new motorcycles hit the market without any resounding success. The same holds good for the executive and premium segment, where five new products were introduced but none was able to generate volumes.
For example, offerings like the Himayalan or Continental GT could not make any difference to Royal Enfield, while new scooters like Duet or Maestro did not make a dent in Hero’s position in the scooter segment. In passenger vehicles, too, the trend continues as only eight of the 35 new launches have been able to generate volumes, while the others have not managed to live beyond the excitement of the initial 12 months.
“Over FY14-17, there have been 26 new launches in the two-wheeler category, of which only one — TVS Jupiter — has managed to retain material market share beyond the initial 12 months. The success rate is relatively higher for passenger vehicles but still low at 8 out of 35 over the same period, viz. Maruti’s Celerio, Baleno, Vitara Brezza and Ciaz, Hyundai’s Xcent and Creta, Renault’s Kwid and Ford’s Ecosport,” Jefferies analyst Arya Sen said in the report.
According to an executive of a car manufacturer, it is very difficult to get a repeat customer if a new model does not become a brand in itself, like a Maruti Alto, Mahindra Bolero or Hyundai Grand i10. Unless a product becomes a brand, it is very difficult to sustain beyond the one-year period.
New offerings such as the Mahindra TUV 300 or KUV 100 could not help increase Mahindra’s market share in the utility vehicle segment while products like the Tiago or Tigor could not make much of a difference for Tata Motors.
For FY14-17, in passenger vehicles only one product was launched in the small car segment — the Kwid — which became successful, while only three out of 15 launches in the compact segment have been successful. In the compact SUV segment — one which is driving the market along with premium hatchbacks — only three of 12 new offerings that have hit the market have managed to generate sustainable volumes.