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| Car makers doll up to face slowdown |
| Danny Goodman / New Delhi Jan 27, 2009, 00:45 IST |
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Launch new models, upgrades.
In order to woo customers amid negative market sentiments in the wake of the financial turmoil, leading car makers are resorting to measures like launching variants or upgrading the existing versions of their products.
Interestingly, the strategy is working in many cases with companies like Toyota, Honda and Tata Motors witnessing a healthy increase in their sales figures.
In September last year, Toyota Kirloskar launched the tenth generation Corolla, the Altis. Prior to the launch, the Bangalore-based car major was finding it difficult to sell even about 400 units of the old Toyota Corolla per month. In fact, it was trailing behind the Honda Civic, the leader in the executive car segment.
Consumers need to pay an additional Rs 15,000 to 25,000 on the model which comes with a new platform as well as a wider and longer body.
Barely months after rolling out the Altis, Toyota Kirloskar has witnessed a major turnaround with Altis sales almost doubling to 1,000 units per month. As a result, it grabbed the number one spot in the executive car segment, while Honda Civic slipped to the third spot after Skoda, which fields two brands in the segment.
For the September-December period last year, despite a slowdown of 30 per cent in the executive car segment, Toyota managed to sell about 4,000 units of the Altis, a 42 per cent increase over the sales in the corresponding period a year ago. The company has an explanation for this change. It says the lifecycle of the model of a car brand, which was about five years earlier , has been shortening. “Now we have to bring in major changes once every 2-3 years,” says Sandeep Singh, deputy MD (marketing), Toyota Kirloskar.
Upgraded versions of some of the popular models which have been losing steam, like the Toyota Corolla, have helped the car makers get back the numbers in spite of the slowdown. “In a recession market, a lot of car makers are resorting to launching variants and upgraded versions in order to woo customers. And the strategy is working in most cases,” says Pradeep Saxena, senior vice-president (automotive), TNS Global.
That is also evident in the sales figures of Honda Siel in the mid-size sedan category. After incorporating changes to the City’s exterior and installing a more powerful, yet a more fuel-efficient, IVTEC petrol engine in around September 2008, Honda City, which earlier sold about 300 units per month, now sells about 3,000 units a month. The new Honda City is the third generation City model and is currently the largest selling premium car in the mid-size segment. The first generation City was launched in 1998.
“The new engine is more powerful and more efficient and it is only 2 per cent costlier than the older model which makes it more appealing to consumers,” says a senior executive of Honda Siel.
This apart, car makers like Tata Motors are also reaping the benefits of brand refurbishing. The company’s small car Indica, launched in 1998, was registering a fall in sales since the beginning of 2008. Car dealers say the diesel variant of the Indica, which constituted more than 70 per cent of the overall Indica sales, was bought primarily by cab operators for its space and fuel efficiency.
But fortunes reversed for Tata Motors when it launched the new Indica Vista in August last year. Apart from being kitted with the latest car engines, the new Vista incorporated contemporary style on the outside and offered more passenger and driver facilities in the interior.
While the company does not give sales break-up, dealers say that the sales figure of the Vista is very good and there is a waiting period of about two weeks for the car model currently. “Now more than 25 per cent of our overall Indica sales comes from the new Indica Vista,” says Shailender Singh Visht, senior vice-president of Delhi-based Sanya Automobiles.
The new models provided fresh elements which made them more cost-effective for the consumers. Analysts say in all of these three car brands exhaustive revamping of the car exteriors was one of the key factors that revived brand interest and hence pushed sales up. Soaring oil prices and tighter emission norms was another factor that made car buyers move towards cars with newer engines like Hyundai’s Kappa and Maruti’s KB series.
Correction
The average monthly sales of the Third Generation Honda City model during the November-December period of 2008 were estimated at 3,666 units, compared to 2,982 units of the Second Generation Honda City model sold every month between January and October 2008.
The figures pertaining to the sales of Honda City in this report are wrong. The errors are regretted.
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