There were only a few winners in India’s automobile market in 2014—Honda, Maruti and Hyundai among them.
Some others like Ford had a mix-bag of a year, while for the likes of Mahindra and Toyota, this was a year to grin and bear it. And for General Motors and Tata Motors, it was a train-wreck.
Overall, the passenger car market continued to stay under pressure. The strong growth that we had become used to in the past has not returned, and whatever growth was seen in 2014 came from new product launches.
While December numbers are not yet in, the Emerging Markets Automotive Advisors (EMMAAA) forecast is that 2014 passenger vehicle sales will end exactly at the 2013 level. This is not bad for a year when the first quarter numbers were down 6.9% from previous year. Only a strong performance in the second half managed to salvage it.
What made them winners?
Hyundai and Honda displayed why having a fresh portfolio in a bad year is such a good idea.
Hyundai had the fresh i10 Grand coming into the year and added the Xcent compact sedan, alongside the i20 Elite. Nearly everything clicked and the Korean carmaker had positive numbers to report in most months.
Honda had the Amaze in the showrooms at the start of the year and followed it up with the new City. Both did well in numbers, aided by the new diesel engine. In the second half of the year, sales were helped by the launch of the Mobilio MPV (multi-purpose vehicle), the first direct competitor to Maurit-Suzuki’s Ertiga.
Meanwhile, Maruti-Suzuki demonstrated, with finesse, why getting the basics right is so important for a carmaker in India. While the company had only one launch in the year with the Celerio, it managed to stay in the positive territory most of the year.
Even in the entry-level A-segment, Maruti-Suzuki managed good numbers, though the particular category was under severe pressure. As the economy stayed down, the A-segment buyer, often buying a car for the first time in his life, stayed away. In comparison, buyers in the higher segments have more economic flexibility (and more money) and return to the market sooner.
Some of the successes of 2014 came in new shapes that had not yet been experimented with in the Indian market.
The small SUV was one—and the Ford EcoSport, Renault Duster and the Nissan Terrano demonstrated why this would be the future segment to watch out. Both Maruti and Hyundai are preparing multiple products for this category, most of which will hit showrooms in 2015-16.
The other new shape was that of small MPVs, which were retooled out of B-segment hatchbacks. The popular Ertiga and Mobilio slug it out in the segment currently and many more will join the contest in the next two years.
In both cases, customers demonstrated that they were looking for new body styles to excite them. Most of these were second or third-time car buyers, indicating the growing maturity in the Indian market.
Even for the traditional hatchback market, customers tended to move upwards, ditching the micro and mini segments (Nano, Alto, Eon) for the compact segment (Swift, i10, Celerio). In 2014, EMMAAA expects 2014 sales of micro and mini segment cars to fall 8.2%, while that of compact segment cars to rise by 8.5%, over 2013 sales.
Better (and bigger) engines
With engine technology advancing, car engines continued to shrink in 2014. Many carmakers experimented with launching bigger cars with smaller, new generation engines. These mills did not cringe on power but packed in much better fuel efficiency.
So, Ford rolled out the EcoSport with a 1.0-liter engine; Volkswagen started offering the Jetta with a 1.4-liter TSI petrol engine while sister-brand Skoda followed suit with the Octavia. The previous generations had been offered with 1.8-liter engines.
Alongside, seven-seater MPVs like the Ertiga and Mobilio came equipped with 1.3-liter and 1.5-liter diesel engines. Both also offered 1.2-liter petrol engines. In comparison, the seven-seater Innova—admittedly, with a significantly higher kerb weight—comes with a 2.5-liter diesel engine.
It was a different scene on the motorcycle front. Average Motorcycle Engine Displacement Index (AMEDI), an index that plots the weighted average of engine sizes of all two-wheelers sold in the market, has risen by 7% in 2014, over 2013, according to EMMAAA estimates. This is mostly fuelled by a greater acceptance of engines that deliver more than 125cc and the increase in the sales of large motorcycles.
In other trends of 2014, the luxury segment continued top soar with both Audi and Mercedes returning 10,000 plus unit sales in the year—and BMW following not far behind. The three luxury brands introduced smaller sized products in the market, attracting more customers. This ate up the Executive and Premium segments in the market, driving them almost to extinction.
A similar story played out in the motorcycles segment where sales of premium bikes soared, driven at the front by the Harley-Davidson Street 750 and new launches from Triumph.
Entering 2015, the worst is over and the market is on its way to recovery. But, as 2014 demonstrated, it won’t be the same for everyone and this may be the year when the consumer separates the wheat from the chaff.