Duster success to push compact SUV launches by global majors

French car maker Renault has fired a salvo into the stronghold of homegrown vehicle manufacturers with the launch of compact sports utility vehicle (SUV) Duster earlier this month. The Duster, has already grabbed over 5,000 bookings.

The response would encourage quite a few other global manufacturers which have been planning launches in the sub-Rs 10 lakh SUV space. While Ford is slated to drive in the Ecosport next year, which would be available in both petrol and diesel variants, in queue are concept products from Maruti Suzuki and South Korean auto maker Hyundai Motor India Limited (HND-7). Maruti Suzuki has showcased a concept SUV XA Alpha based on the Swift platform at the auto show in Delhi this year and is currently conducting a feasibility study to assess the viability of commercially developing the product in the country. General Motors and Toyota are also said to be interested in the space.

There is a reason for this flurry of launches. The UV segment (which includes multi-purpose as well as sports utility vehicles) grew by 50.85 per cent between April and June this year to 117,711 units. The share of UVs in the overall passenger vehicle industry has increased to 17.81 per cent in this period from 12.96 per cent in Q1FY12. The strong demand for utility vehicles in the Indian market has made industry body Society of Indian Automobile Manufacturers (SIAM) revise upwards growth projections for the category to 29-31 per cent from the earlier estimate of 10-12 per cent.

THE SUB-RS 10-LAKH SUV SPACE IN INDIA
MODEL	PETROL	DIESEL	2012 SALES
Renault Duster	Rs 7.19-8.19 lakh	Rs 7.99-11.29 lakh	-
Mahindra Scorpio	-	Rs 7.79-10.8 lakh	24,905 units
Tata Safari	-	Rs 8.28-12.29 lakh	7,374 units
Mahindra XUV500	-	Rs 11.58-13.03 lakh	18537 units

Duster - tagged at an aggressive Rs 7.19 lakh (ex-showroom, Delhi) for the base petrol variant and priced upwards of Rs 7.99 lakh for diesel-powered versions - straddles the sub-Rs 10 lakh SUV space and has also thrown open a serious challenge to heavyweights like Mahindra & Mahindra and Tata Motors who have dominated the market with the Scorpio and the Safari for 10-odd years. Renault had introduced SUV Koleos earlier in September last year but it is positioned at the premium end with prices starting at Rs 22.99 lakh.

Marc Nassif, managing director, Renault India, says “The Duster is central to our strategy for growing footprint in India. It is going to be a game-changer in its segment.” Globally, the company has sold 300,000 units of the vehicle. In India, Renault is expecting the Duster to contribute significantly to the sales tally of 30,000 units the company has earmarked for itself in the current year.

The positioning and the price points of the Duster is such that Renault expects to draw in customers in the SUV space and from among those looking at driving home a premium hatchback or a sedan. “Duster offers all the features and comforts available in a sedan but has the styling and space of a sports utility vehicle. It is a segment breaker and we expect to draw customers both in the SUV space and also from among those looking at buying a premium hatchback or sedan”, says Len Curran, vice-president (sales & marketing), Renault India.

High localisation levels have been key to pricing the product competitively for the Indian market. The Duster has local content of 60 per cent which would be raised to 80 per cent over the next few months. The base diesel variant of the Duster is priced a tad higher than segment leader Mahindra Scorpio but comes Rs 29,000 cheaper than Tata Safari.

Competitors, however, are not losing sleep. “We have tried, tested and proven products in our portfolio. The Scorpio has product differentiators. It is sturdy, offers flexi seating. Besides, in the US or other south-east Asian countries utility vehicles account for 45-50 per cent of the overall passenger vehicle market as compared to 16-17 per cent in India. There is a lot of room for all to grow”, informs Pravin Shah, chief executive officer (automotive division), M&M. Interestingly, Mahindra is working on launching a mini-utility vehicle (based on Xylo) and a refreshed and upgraded version of warhorse Scorpio which has now been on road for over a decade now. Tata Motors too is scheduled to introduce Safari Storme next month.

Shah adds, “There has been a shift in lifestyle of Indian consumers. People tend to drive out more often for weekend trips with families and friends. SUVs offer more seating capacity, are diesel driven and therefore more powerful and fuel-efficient. Therefore this segment has grown despite the sluggish market.”

“Earlier customers did not have options in the compact SUV segment. Today global products at affordable price points are being introduced in India. The growth in this category will be much faster than that recorded in the overall industry”, concurs Nigel Wark, executive director (marketing & sales), Ford India.