Top sellers Maruti & Hyundai, known for entry-level cars, finding more takers for premium vehicles
When the country’s top sellers of passenger vehicles find few takers for their otherwise bestseller entry-level cars, finding more traction in the premium segment, you know consumer preferences have changed. And, when you see that there has been no product launch by these companies in the entry-level segment in the past three years, you know the trend is here to stay.
That equations have changed is evident from the numbers. The country’s top two car markers — Maruti Suzuki and Hyundai Motor — which were once known for their small, cheap cars, are today reaping more from premium products above the `6-lakh range. The contribution of premium products to the overall volumes for Maruti touched 26% in FY17, against 14% a year back. Similarly, Hyundai’s premium cars contributed 46% to its overall sales, compared to 43% a year back.
The last car launched below the `6-lakh category by these firms, the Celerio by Maruti, is more than three years’ old. Since FY14, Maruti has launched four products — Ciaz, S-Cross, Vitara Brezza and Baleno — all in the premium category.
In FY17, the production and sales of Baleno (a premium hatchback) and Vitara Brezza (a compact SUV) touched the 10,000-unit mark per month, while the Ciaz sold an average of almost 5,500 units per month. For Hyundai, almost 50% of the volumes during the last fiscal came from the Creta (a compact SUV) and the Elite i20 (a premium hatchback). Both the products sold an average of 10,000 units each per month during the fiscal. Clearly, consumers are increasingly moving towards more premium cars or SUVs, with the good old, entry-level vehicles no longer the preferred choice.
It’s a turnaround for dealers too, as selling small cars is becoming more difficult, forcing them to offer high discounts to push sales. “To sell an Alto we have to give a discount of at least `50,000, but we need not offer a single penny as discount for products in the premium category.
Most Nexa dealers (showrooms which retail only premium vehicles by Maruti) have already recovered half of their investment. It’s a win-win situation for both the company and the dealers,” said a Maruti dealer, who owns a regular as well as a Nexa showroom.
“The sale of premium vehicles contributes heavily to the top-line of a company and also increases the realisations. Customers these days are looking to buy products packed with features, which is leading to demand for premium hatchbacks and compact SUVs,” said Sridhar V, partner (automobiles), Grant Thorton.