Domestic automotive industry: Maruti Suzuki, Hyundai retain top position among carmakers

In the first five months of the current financial year (April to August), the top two carmakers shored up their market share by nearly 300 basis points to 67.29% from 64.15% in the corresponding period in FY17.

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Both stronger with popular UVs; other players fail to impress with their models. (Image: Reuters)

Carmakers Maruti Suzuki and Hyundai retain their pole position in the 3.06-million unit domestic automotive industry. In the first five months of the current financial year (April to August), the top two carmakers shored up their market share by nearly 300 basis points to 67.29% from 64.15% in the corresponding period in FY17. The surge is largely a result of Maruti’s increasing dominance in the utility vehicle space and subdued performance of carmakers such as Honda, Mahindra and Mahindra (M&M), Ford and Renault, among others. In FY15, both Maruti and Hyundai commanded a market share of 61.18%, which further increased to 64.14% in FY16 and remained in the vicinity next fiscal too. Among the other carmakers, M&M lost significant market share in the first five months of the current fiscal, from the corresponding period last fiscal, in the utility vehicle (UV) segment — by 360 basis points to 25% — as result of the fierce competition from Maruti’s Vitara Brezza and Hyundai’s Creta. In FY12, M&M’s market share in UVs zoomed to 55%.

“Maruti Suzuki’s market share strength continues to surprise us. With a strong order backlog (four-five months for new models) and a healthy launch pipeline, there is high demand visibility for the next two years. Hyundai also makes up for loss in car market share by reporting 13% market share in UVs, with Creta sales averaging a staggering 10,000 units per month,” said analysts at Axis Capital in a report on the sector. M&M’s two new products — TUV 300 and KUV 100 — did not work. As a result, the volumes remained flat in the last couple of years.

Japanese carmaker Honda also lost substantial volumes as its launches Jazz (premium hatchback) and BRV (compact UV) did not generate enough excitement among customers. The volumes have started to pick up with the introduction of the new variant of the City and the WRV (a compact SUV), but they cannot be compared to the peak of FY13-14. French carmaker Renault did increase its volumes on the back of its small car Kwid, which sold almost 10,000 units per month in FY17, but in the current fiscal, Kwid volumes have also started to slip. In the April to August period, the volumes of Kwid fell by 21.2% y-o-y to 45,470 units.

American carmaker Ford may have become the third-largest carmaker countrywide, but when it comes to the domestic market, volumes continue be in the range of just 7,500 to 8,000 units per month (two-third of the units are exported). The company is yet to find its next volume driver after its compact SUV, Ecosport. Japanese carmaker Nissan, too, has an export-oriented approach, as most of its recent products did not do well in the domestic market. Its offering in the small car segment,  Redi-Go’s volumes, increased marginally to just 11,328 units on the April to August period, while other products, like compact hatchback Micra and Go, sell just 500 units on an average. Its compact SUV Terrano also registered sales of just 1,699 units in the current fiscal.

Fiat, on the other hand, is trying once again to consolidate its position in the domestic market with the launch of the Jeep Compass, but volumes are not expected to be very high because of the price it commands. As per industry experts, both Maruti and Hyundai have been going through capacity constraints and the latter is yet to launch a new product in two years, but other manufacturers have not done anything to fill the void.

“Well, most of the products launched by other carmakers did not generate enough volumes, barring (Tata) Tiago and Kwid. Going forward, this grip (of Maruti and Hyundai) in the domestic market will get further strengthened since these are the only two carmakers that have decade-old products in the portfolio, but still generate more than 10,000 units in a month,” said an analyst with a foreign brokerage firm.

In FY17, the passenger vehicle industry reached the three-million mark for the first time and only Maruti and Hyundai increased their volumes — on a high base — amongst the top five manufacturers. Tata Motor’s compact car Tiago managed to generate volumes in the range of 5,500–6,000 units, but other models Tigor, a compact sedan, and Hexa (an SUV) did not have much positive impact on volumes.

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