Nearly 30 new car, 20 two-wheeler launches lined up till March 2020

Rise of the millennial population, increasing disposable income and availability of innovative mobility solutions will drive the market

Passenger vehicle (PV) and two-wheeler sales in the country have been bleak in the past few months, despite inquiries being good, due to poor consumer sentiment. To create excitement among consumers, especially during festivals, car manufacturers have lined up around 25-30 launches and two-wheeler makers have lined up another 20 between August 2019 and March 2020. The new launches include electric and hybrid vehicles.  

On an average, car makers, excluding luxury ones, invest around Rs 1,500-2,000 crore to launch a new car.

Two-wheeler and PV retail sales dropped by five per cent and 4.6 per cent, respectively, in June 2019, compared to last year. 

CARE Ratings says that demand might remain muted till the second quarter before it starts picking up from the third quarter due to festival and pre-buying before BS-VI implementation from April 1, 2020. Also, with higher MSPs announced, farm income is expected to be marginally higher and encourage rural spending.

To cash in on this, car makers have lined up nearly 25-30 new launches. Some of them include Maruti Suzuki Ertiga Cross and S-Presso, Hyundai New Grand i10, Tucson Facelift and Hyundai New Elite i20. Honda would be launching Honda HR-V and New City, while Tata would introduce the Buzzard and Altroz. Skoda expects to launch Karoq, and Renault to launch Renault Triber and Kwid Facelift.

Vikas Jain, national sales head, Hyundai Motor India Ltd, said that sometimes, a slowdown in the market is a cyclical phenomenon. Due to practical challenges such as volatility in fuel prices, high interest rates and increase in insurance premium, some of the buyers are deferring their purchase decision. 

The long-term outlook is good considering that the penetration of PVs in India is still very low at around 20 out of 1,000 people. The rise of the young millennial population, increasing disposable income and availability of innovative mobility solutions will drive the market.

While the urban markets are experimenting with various mobility solutions, the rural segment will continue to boost the market as there is a huge aspiration to own a vehicle. The rising disposable income and expanding presence of financial institutions, which expand credit at attractive rates, will enable the ownership of cars. Also, increased government spending for rural infrastructure development and low car penetration in rural areas will result in growth of rural market, said Jain.

The rural market accounted for 17.3 per cent of Hyundai's total sales in 2018-19, and the company expects this figure to touch around 18 per cent. 

Original equipment manufacturers are also betting on electric cars. Of the total new launches, six would be in the electric vehicle (EV) space. These include one from Tata, along with the Mahindra e20 NXT, Mahindra eKUV100, Nissan Leaf, MG eZ, Audi e-tron (first luxury SUV at around Rs 1.5 crore) and Jaguar I Pace. 

At present, Tata (Tigor EV), Mahindra (E-Verito and E20 Plus) and Hyundai (Kona) are in the market. The prices start from Rs 8.24 lakh (E20) and go up to Rs 25.30 lakh (Kona). 

As battery prices, which account for around 50 per cent of an EV's cost, are coming down by 15 per cent year on year, and, on the other hand, internal combustion engine product prices are going up due to regulatory norms, manufacturers are optimistic that EVs will attract customers. The government has also announced various incentives, including tax deduction and reducing goods and services tax, for EVs to attract customers.

Two-wheelers

Nearly 20 two-wheelers, including one hybrid and two electric products, are expected to hit the roads and they are mostly in the budget and premium categories. Almost seven of these launches would be scooters. 

Upcoming launches include the Honda CBR300R, Honda PCX 125, Honda Activa 125 Fi, Bajaj Pulsar 125, KTM 1050 Adventure, Bajaj Pulsar 180NS, Bajaj Urbanite, Hero Hastur, Hero Leap Hybrid SES, Suzuki, TVS Zeppelin and TVS Creon. Of these, TVS Creon and Bajaj Urbanite are electric vehicles.

Devashish Handa, vice-president of sales, marketing and after sales, Suzuki Motorcycle India Pvt Ltd, expects that demand should start reviving before the season sets. 

The new government has already set the ball rolling by nudging the industry, regulators and the banking sector. The Reserve Bank of India has already relaxed the monetary policy, and commercial banks have started following its lead. The liquidity issue is being addressed through this, which should give a fillip to growth. 

The level of decline in the industry has also come down from 12 per cent earlier to around seven per cent last month.

"My sense is it should turn the corner in a month or two -- before the season sets in itself. And we should have a much better season than what we had last year," said Handa.

Suzuki has launched the upgraded Gixxer motorcycle and the brand new Gixxer 250. It will also be adding a naked variant in the coming days. 

"Despite headwinds, we are hopeful for a revival with decent monsoon and festivals, which drive both urban and rural demand," said a TVS spokesperson.