InFocus | India
Stepping on the gas
Passenger vehicle sales in India crossed the one million mark in 2005.
- By Rajendar Menen, Gulf News Report
- Published: 00:00 August 14, 2006
- Visitors at the Maruti pavilion in Pragati Maidan during the eighth Auto Expo 2006 in New Delhi in January.
- Image Credit: AP
Potholed roads, worsening traffic jams and spiralling fuel prices notwithstanding, new two- and four-wheel vehicles are all set to emerge on the clogged Indian highways. This year alone will see at least 30 new launches, spanning affordable hatchbacks to mid-size models to super-luxury, high-end cars and sport-utility vehicles (SUVs). The next generation of vehicles will vary in size, colour and speed and challenge the imagination.
After the Audi A4 launch followed by the Q7 SUV and the RF4 by the year-end, General Motors India (GMI) will roll out the Aveo in both hatch and notch versions giving premium compact cars such as the Swift and Getz a run for their volumes. Also due from GM is a sporty variant of the Chevy Optra to add to its existing line-up.
Maruti vehicles
Maruti is planning a premium mid-size car to be positioned above the Baleno. And with the diesel plant up and running, Swift will roll out with a diesel option giving Tata's Indica tough competition.
Archrival Hyundai will also reveal a premium mid-size model. The Verna, due this year, will be positioned between the Accent and the Elantra to offer the just-launched Ford Fiesta some competition. The company also plans to launch the next generation Getz in early 2007.
Adding to the mad rush for mid-size market share is the Honda Civic. The Civic will compete with Toyota Corolla and Skoda Octavia. Skoda is also planning two new Octavia variants on the VW A5 platform that will offer the range more variety.
The Fabia is due for launch late this year and while Mahindra and Mahindra (M&M) and Tata Motors are planning facelifts of their existing models this year, Toyota is likely to roll out the Fortuner SUV to give Innova some company. Ford plans to bring its Focus Sedan, positioned between the Fusion and the Mondeo, in the increasingly crowded lower-D segment. The top-end super car segment is also saturated. On the anvil are the new Mercedes Benz M class and S class, and the India-assembled BMW 3 and 5 series.
Suzuki Motor Corporation, a majority partner in auto leader Maruti, is also planning to introduce a new ‘crossover' model in India which it was developing in partnership with Italy's Fiat Auto. "The development of the car is on, in partnership with Fiat. We expect the car, a crossover between a small car and an SUV, to be introduced (in India and Europe) by next year," says Suzuki Motor Company Board Member Hirotaka Ono.
Suzuki is also planning to develop two new global models in India by 2007.
A leader in the Indian passenger car market with about 50 per cent market share, Maruti and Suzuki announced a whopping Rs60 billion investment for India, including a diesel engine plant to cater to domestic and international markets. Japanese automobile giant Toyota has also revealed plans to launch a small car in India by 2010. Toyota hopes to develop this car in Japan and use the expertise of its subsidiary Daihatsu Motor Co.
Rolls Royce, Bentley and Maybach are a few of the high-end automobile manufacturers eyeballing India in recent years. The passenger vehicle sales in India crossed the one million mark in 2005. This segment grows at 10 to 15 per cent annually. About 85 per cent of the cars sold in India are financed as against the global average of 70 per cent. Goldman Sachs has predicted that India will have the maximum number of cars on the planet by 2050, overtaking the US.
Ambitious plans
While the more colourful brands fight for road space, Tata Motors, one of India's biggest motor manufacturers, has announced ambitious plans to launch a cheap, small ‘people's car' in 2008 for about $2,237. Tata Motors, a subsidiary of one of the country's largest conglomerates, will invest Rs10 billion ($223.76 million) in the plant near Kolkata in West Bengal. The ‘people's car' hopes to bridge the gap between cars and scooters for three million people a year in India.
"Families who presently ride through the heat and dust on a two-wheeler will have an alternative in the form of a car for the first time," says Ravi Kant, Managing Director of Tata Motors. "The car would be like nothing else on the road. We have prototypes, and a lot of work has gone into this project. It is going to be a major change in the way people look at cars."
The two-wheeler boom is also in step with the crush on road space. Japan's Suzuki Motor Corporation plans to expand its motorcycle plant in India. Suzuki Motor, which owns 74 per cent in Suzuki Motorcycles India Pvt. Ltd., will invest over Rs3 billion in its plant in Gurgaon in Haryana. Capacity at the plant, currently 100,000 units a year, will be increased to 180,000 units and then stepped up every year as demand grows, says Katsumi Takata, Joint Managing Director, at the motorcycle unit.
Motorbike market
New launches, larger incomes and cheap vehicle finance have helped drive sales in India's six-million-units-a-year motorbike market, the largest after China.
Hero Honda Motors Company, in which Japan's Honda Motor Company has 26 per cent stake, has about 48 per cent of the market, with Bajaj Auto Ltd. coming in second place. Honda, TVS Motor, Kinetic Motor and others are also targeting young, upwardly mobile women — the new Indian market —with stylish, gearless scooters.
The competition is fierce and Japanese firms are revving up for a bigger market share for themselves. Honda has a fully owned unit that makes motorcycles and scooters and Yamaha Motor Company is planning to invest $67 million in its Indian unit over the next three years, as it looks to triple its share to 15 per cent by 2010.
Meanwhile, Hero Honda rolled out its fifteen-millionth bike in 21 years of operations. "The Hero Honda family is elated to have achieved the landmark figure of 15 million motorcycles in the shortest ever time-span. This year, Hero Honda will launch eight exciting new products to consolidate its market leadership," says Pawan Munjal, Managing Director, Hero Honda Motors Ltd. In 2005 to 2006 alone the company sold three million bikes.
Having dethroned Bajaj Auto from the pole position in the motorcycle market in India, Hero Honda Motors Ltd. has announced its entry into the burgeoning gearless scooter market. It rolled out its first scooter — 102cc Pleasure — and announced plans to introduce a host of new models, including a geared model that will take on rival Bajaj and even its own sister firm Honda Motorcycle and Scooters India. "We hope to increase the market share of scooters. This may be our maiden scooter but it is certainly not the last," says Munjal. Hero Motors plans to sell 100,000 scooters by December 2006.
Harley-Davidson Motor Company, the US-based manufacturer of distinctive large-engined motorcycles popularly nicknamed ‘hogs', and an iconic symbol of American machismo and biker culture, has also set its sights on India. Japanese motorcycle manufacturer Yamaha and BMW have also been talking to the government to allow bikes over 500cc to be imported and waive ‘homologation' (testing for fitness on Indian roads required to import new models of cars) for products beyond the 500cc engine range. They will compete with Royal Enfield, already firmly entrenched in India.
According to figures released by the Society of Indian Automobile Manufacturers (SIAM), motorcycle sales soared by 17.1 per cent in the domestic market and touched 5.8 million units (a market of about $4 billion) in 2005 to 2006 as against 4.9 million units in 2004 to 2005.
Growing segment
Overall, the two-wheeler segment, including scooters and motorcycles, grew 13.6 per cent at more than seven million units against 6.2 million in 2004 to 2005.
Bike exports in 2005 to 2006 grew a massive 39 per cent, with Bajaj Auto and Hero Honda, the two main domestic players, leading the charge. Close to 400,000 bikes were shipped in 2005 to 2006. New entrants Honda Motorcycle and Scooter, Suzuki Motor, and Yamaha Motor are adding capacity and launching new models.
Clearly, India is in the driver's seat.
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