Foreign carmakers struggle for recognition beyond flagship models

Most foreign automakers rely heavily on a single model for generating most of their India sales

Mumbai-based Shubham Naik (46), a civil engineer, knows the difference between Android and Windows-powered handsets but when it comes to identifying car models of foreign car makers, his struggle to differentiate becomes evident.
 
"I know that the Duster is made by Renault but beyond that I would need Google", confesses Naik when asked to name any of Renault's other five models. Naik is amongst several others who find it difficult to identify car models other than the most popular one of any particular manufacturer.
 
But Naik cannot be blamed entirely. The Duster generates slightly more than 91% of Renault's sales in India, dwarfing the remaining five, which includes a hatchback, a sedan and a sports utility vehicle (SUV).
 
Last financial year, the French car maker recorded sales of 43,384 units of which 39,279 units were Dusters, its compact SUV. Its hatchback Pulse, which competes with Hyundai Elite i20 (on price) recorded volumes of only 2,301 units during the same year, an average of less than 200 units a month.
 
Until 2013-14 Renault's overwhelming dependence on the Duster appeared faultless as sales headed north. But when SUV market leader Mahindra & Mahindra launched an all-new Scorpio last year it was the Duster that took a hit – Renault sales last year slipped 24% while that of the Duster fell 16% from its earlier 46,786 units.  
 
 US-based Ford Motor Company finds itself in a similar spot. Despite having five models selling under its name, the EcoSport continues to be its biggest seller with a 71% share of its India pie last year. The super-compact urban SUV dominated other Ford models which includes a hatchback, two sedans and a SUV.
 

Ford India clocked 75,138 units last year of which the EcoSport sold 52,058 units. While EcoSport volumes marked a growth compared to 2013-14 volumes (45,008 units), Ford's total domestic sales tumbled 11% compared to 2013-14 volumes (84,469 units).

 
Honda, the second biggest Japanese car brand in India, had to fall back on its flagship model City, a top-selling mid-size sedan competing against Hyundai Verna, Maruti Ciaz, and the Volkswagen Vento, to name a few. As much as 56% of its volumes are driven by the City alone.
 

While the Amaze compact sedan attracted car buyers, accounting for 28% of Honda's domestic volumes, the Brio hatchback continued to be a drag. Brio volumes closed 1,120 units a month last year (873 units in May), down from 2,700 units a month recorded two years ago.
 
 Honda officials, however, put a brave face on those numbers.
 
Jnaneswar Sen, Sr. Vice President, Marketing & Sales, Honda Cars India  said, “The Brio numbers are as per our plan which is evident from the fact that it is not on any discount despite a heavily discounted segment. Also being a petrol-only model, it is competing with petrol hatchbacks only. The Brio numbers may have been less in comparison to the other established models but the car gave an opportunity to customers in India to experience Honda's values".
 

Analysts tracking the sector say that some companies have struggled to move beyond their flagship purely because not enough effort was made to challenge market leaders in those segments. The Honda City, for instance, was in 1998 that company’s first product in India and has since remained the top-seller despite Honda entering new segments.    
 
“For some manufacturers it was their choice to be a major in a particular segment because that is how one can get started in a market. But some of them have been stuck within that segment,” said Abdul Majeed, partner and national automotive leader at consulting firm Pricewaterhouse Cooper, who is critical of so much dependence on a single model.
 
“It’s not a good strategy. Success with one product could be short lived and that is why you need to diversify,” he cautioned.
 
India's top two car makers Maruti Suzuki and Hyundai, which control 64% of the domestic market, have an evenly spread sales chart. Models like the Alto, Swift, Swift Dzire and Wagon R generate 72% of Maruti's total sales while for Hyundai, the Grand i10, Elite i20, Xcent and Eon generate 79% of volumes.
 
Toyota has learnt this lesson, thought. The Bengaluru-based company has managed to drive down the share of its top-selling product Innova in the last one year while pushing its hatchback and sedan, Etios Liva and Etios, respectively.
 
Innova, which is the largest selling product in its category, commanded a share of 44% by end of last year, against 47% in 2013-14. The company's volumes grew 10% last year even as overall industry share grew just 4%. Toyota sales growth has beaten that of the industry due to the addition of safety features like airbags, said company officials.
 
N Raja, director and senior vice president (sales and marketing) Toyota Kirloskar Motors said, "The Etios has been constantly receiving good acceptance from the customers especially since the launch of the new Etios and Liva, when the airbags were standardized across all grades of the Etios series. In 2014 we sold 70,737 units of the Etios series, in comparison the Innova sold 59,447 units (in the same year)".
 
Renault, Ford and Honda are working towards finding a solution to this. While Renault is preparing to launch an all-new hatchback Kwid later in the year, Ford will launch a new compact sedan called Aspire, and a new version of its Figo hatchback. Honda too will launch the all-new Jazz, a premium hatchback in the next few months.  

Company	Flagship model	% Flagship model to total sales*	Other models
Renault	Duster	91	Pulse, Scala, Lodgy, Fluence, Koleos
Toyota	Innova	44	Liva, Etios, Etios Cross, Corolla, Fortuner, Camry, Prius, LC Prado, LC 200
Honda	City	41	Brio, Amaze, Mobilio, CRV
Ford	EcoSport	71	Figo, Fiesta, Classic, Endeavour

Source - Society of Indian Automobile
*2014-15