Smaller players like Toyota, Ford and Renault capture bigger market share

The smaller players in the domestic car market are beginning to see a comparatively bigger ride. In a trend reversal, the combined share of top five car companies has come down while the next five have gained share in an expanding market. All the five companies (occupying sixth to tenth position) led by Renault and its alliance partner Nissan have expanded share.

The combined share of top five companies (Maruti Suzuki, Hyundai, M&M, Honda and Tata Motors) is down from almost 85 per cent in FY16 to 82.6 per cent in the first eleven months of FY17. Among these, only Maruti and Tata have gained share. Japanese automaker Honda is the main loser and it also slipped to the fifth position from fourth in the previous year.

Tata now occupies the fourth slot with the incremental volumes from the Tiago, its small car. Second biggest player, Hyundai’s share in the market has seen a marginal decline even though it sold more vehicles compared to last year. Rakesh Srivastava, senior vice-president (sales & marketing) at Hyundai said the volume sold by the company is according to its calendar year plans.  M&M’s volume this year is not very different from what it did last year as demand has been hit in rural markets post demonetisation in November.

However, Toyota, Ford, Renault, Volkswagen and Nissan (ranking sixth to tenth in market share for FY16) have all got a higher share now. These five companies now enjoy a 15.6 per cent share in domestic market compared to 12.9 per cent in the previous financial year. To put this in perspective, the increased share translates into an additional volume of 81,000 units for these smaller companies. The industry is poised to sell three million passenger vehicles in the domestic market this year.

The key gainer among the smaller players has been the French car maker Renault. From a mere 2.57 per cent share in FY16, it has come close to a share of 4.5 per cent in the eleven months of current year. The surge comes on the back of approximately 100,000 units of the Kwid it sold in the domestic market this year. Its alliance partner Nissan has also moved from 1.41 to 1.88 per cent due to contribution from the rediGo. Sumit Sawhney, chief executive officer and managing director at Renault India said last week that that the Kwid has a potential to sell higher numbers. Renault has scaled its sales network by adding 65 points in 2016 calendar year. Another 50 outlets will be added in 2017, taking the number to 320.

German auto major Volkswagen and American company Ford have also gained share on the back of double-digit growth in volumes during the year. Toyota, which was  hit by a ban on diesel vehicle sales in the national capital region in Q4 of FY16 and H1 of the current year, also saw a marginal increase in share due to demand for the new Innova Crysta and the new Fortuner.

“Indian car market is dominated by top three players — Maruti, Hyundai and M&M — who together command two-third of the share. The small increases seen by those with tiny market share augur well for many new players waiting to enter the market,” said an automobile analyst.

India, according to various estimates, is poised to emerge as the world’s third-biggest car market by 2020, with an annual volume of five million units. Top global car makers such as GM, Ford, Toyota, Honda and Fiat have a base in this country but hold a single-digit market share. SAIC (China’s top carmaker), Korean company Kia and French company PSA are readying plans to enter India.