Consumers sway towards 'traditional' auto brands

New models cannot always ensure success, admits Arvind Saxena, MD, Volkswagen Passenger Cars

Last month Europe' s largest automaker Volkswagen announced a target of capturing 7% share in India by 2018. This target, however by the Beetle-making company, is a downward revision from its earlier intent of having 20% share by 2018.

Similarly, General Motors India had set itself an ambitious target of 9% share by the end of 2013. But with the slide in demand for its range and competition breathing down its neck it is unlikely that the company will meet this target.

Premium Czech car brand SkodaAuto is phasing out its only compact car Fabia in India after continuos underperformance by the hatchback despite being in local showrooms since 2007.

Despite an array of launches backed by strong brand promotion campaigns automotive companies like Volkswagen, General Motors, SkodaAuto and Fiat have found it difficult to penetrate the stranglehold of traditional Indian heavyweights.

Companies are thus forced to revise targets after having failed to hurt Indian heavyweights like Maruti Suzuki, Hyundai Motor and Mahindra & Mahindra who have not only defend their turf but improved their market share as well.

Mumbai-based Tata Motors, the fourth largest passenger vehicle maker in India, remains the only exception with a constant erosion in market share thanks to an aging product line-up. Others such as Honda and Toyota have improved their share on the back of new launches.

As India hits a slowdown phase, Germany-headquartered Volkswagen is learnt to have taken a pause for the market presently and has instead shifted focus to China where new models would hopefully push the company to the number one position by 2018 globally.

Arvind Saxena, managing director, Volkswagen Passenger Cars, Volkswagen Group Sales India, said recently, "Not always new models can give you success, we have several stories (of that)...one can refer to the several launches happened in this country. So there is no fixed formula that (if) you have a new product you will succeed. We are not looking at increasing our market share, we have to maintain it (at current levels) this year."

Company	Market Share 2011-2012	Market share 2012-13	Target Share	Target share by year
Maruti Suzuki	38.43	39.12	NA	NA
Hyundai	14.84	14.27	NA	NA
Tata Motors	14.16	11.70	NA	Na
Mahindra	9.38	11.56	NA	NA
Toyota Kirloskar	6.11	6.16	10	2015
General Motors	4.20	3.28	9	2013 end
Ford India	3.53	2.87	NA	NA
Honda Cars India	2.07	2.73	5	NA
Volkswagen India	2.99	2.43	7	2018
Renault India	0.15	1.95	5	2016
Nissan India	1.27	1.37	10*	2016

Market shares data - SIAM
Target share data - Companies | Data for domestic market only
*Includes sales of Datsun brand

Riding high on a blitzkrieg advertising campaign coupled with the association with Indian Premier League for two years Volkswagen increased its share to career-best three%. However no new product launch in volume segment and stronger competition has reduced VW's share to 2.19% in April this year.

General Motors launched two models Chevrolet models within a space of less than four months between them last year. However, both Sail (sedan) and Sail UVA (hatchback) are yet to push volumes higher for General Motors.

Car buyers opted to stay loyal to Maruti Suzuki, India's largest car maker, which nearly achieved its targeted 40% share last year. The company though surpassed that target to close April at 43.44% share, according to SIAM data.

"New models like the Ertiga and Alto 800 and in-demand products like Swift and Dzire have helped Maruti beat rivals. What has also helped the company is the perceptible consumer shift to traditional reliable brands during a slowdown", an analyst with a Mumbai-based brokerage firm said.  

Mumbai-based Mahindra & Mahindra, the largest manufacturers of utility vehicles in India, too have benefited from a nearly all-diesel line-up, thereby substantially improving its market share.