EDGING out Japan, India recently became the third largest auto market after China and USA with 42.5 lakh new car sales last year. A recent report found a 12 per cent rise in new car and SUV (sports utility vehicle) sales. The two trends that stand out include traction towards electric vehicles (EVs) as well as the increasing demand for compact SUVs. So far, the visibility of electric vehicles has been limited to brands like Tata Motors, MG and Hyundai, but with the government push towards alternative fuels, the auto industry seems marking itself for EVs, with most brands coming out with their electric variants. Hitting the road this year are electric cars like Citroen eC3, Maruti Brezza EV, Tata Tiago EV and Hyundai’s Ioniq 5.
Tata Motors, which already has a strong EV presence with variants like Tigor and Nexon, expects half of its sales to come from the electric vehicle segment by 2030, while Japanese automaker Suzuki Motor Corp is hoping for 15 per cent of its sales through six EV launches by then. With 16 models in the pipeline, Mahindra and Mahindra envisions an EV penetration of 25 per cent in its SUV sales by 2027.
“EVs are slowly gaining acceptance and the segment is coming up as a strong second car. It is just a matter of time when it’ll be the first car. As more players enter this segment, the transition from Internal Combustion Engine (ICE) will become seamless,” says Rishi Dada, state chairman of the Federation of Automobile Dealers Association of Punjab. India is already sitting on BS6 emission norms, and with the scrappage policy in place, a whole new ecosystem for buyers will be created, he adds.
The major change is in the approach to the energy that the cars run on, says automotive reviewer Sudeep Koshy. “While the whole remapping of drive-power with people turning to electric cars is fast gaining pace, the attitude switch from diesel to petrol is noteworthy. With diesel prices not enjoying the protection of subsidies as they used to, more and more automotive manufacturers are moving in favour of petrol engines. For instance, the current line-up of Volvo SUVs has a mild hybrid model — turbo-charged petrol engines mated to a 48V battery.”
Many manufacturers have already started shifting from diesel to CNG variants. Tata Motors launched Altroz iCNG and Punch iCNG while Toyota Kirloskar announced the prices of Urban Cruiser Hyryder’s CNG variant.
Also making headlines is the increasing demand for crossover or compact SUVs, many of which are coming in less than 4m length and an engine strength below 1500cc. The compact SUVs are gaining favour for their vantage view of the road and confidence stance. At the Noida Auto Expo, it was the launch of off-roader Maruti Jimny that got the maximum traction. Similarly, the new Thar (RWD) from Mahindra evinced much interest. Among the other hit launches of the year are SUVs like Harrier #Dark and Safari #Dark from the stable of Tata Motors, while Toyota Kirloskar has come out with the new Innova Crysta.
“The demand for the sedan segment, which starts at around Rs 10 lakh, has moved to the mid-size SUVs, which start at Rs 12 lakh or even less. From a barely 10 per cent market share earlier, SUVs comprise close to 50 per cent of the sales. Besides their sporty and stylish looks, these offer better posture, seating space, and off-roader feel. This is also the reason for their popularity in Punjab, where more than 50 per cent sales have been of these SUVs, unlike the rest of India where their share is around 45 per cent,” says Amit Mittal, director of Lovely Autos, Jalandhar.
“This is a phenomenon seen in many markets across the world. Going by economic reasons and, more importantly, concern for parking woes and road congestion, smaller vehicles have always been the preference in Indian markets. Add to this, a general predilection for SUVs, the reason for the surge seems natural. A growing environmental awareness about carbon emissions makes the going for the smaller engine and smaller car look like the right thing to do,” says Koshy. This also means smaller players or new brands looking to spread their wings are going to get a never-before chance to fall into the consideration set of buyers and prove their worth, he adds.
Understandably so, relatively new players like Citroen are finding many takers. Buyers are loving this French automotive brand for its cost, fuel efficiency and aftersales services like service on wheels, claims Navnish Chopra, general manager at Citroen, Chandigarh. “With a starting price of Rs 5.98 lakh, C3 (petrol) is targeting first-time middle segment buyers, though many are taking it as a second car as well. We have sold more than 180 cars in the tricity since the brand came in July last. Our electric variant eC3 is hitting the roads very soon.”
While the demand for new cars has been rising steadily, the shortage of semi-conductor chips continues to be a dampener. The prolonged war between Ukraine and Russia, the two major suppliers of semiconductor-grade neon gas and rare metals necessary for the manufacture of chips, is making the recovery even more difficult. Some microcontroller chips have a lead time of 52 weeks or even more, which is stretching the waiting period for buyers.
Ramneek Handa, managing director at Raga Motors, Jalandhar, says, “The piled-up demand since the pandemic has led to ghost bookings across multiple brands. A number of ‘brokers’ have entered the market and they are making pseudo bookings. Even when the car is ready for delivery, the inventory keeps lying with us as the ‘broker’ is looking for a buyer. This doesn’t give us a fair idea of the actual bookings being made while increasing our inventory cost, even when there’s a shortage.” Genuine customers are the sufferers, he adds.
“Brokers come in when demand is more than the supply. The problem was unheard of around two years back. Once the supply line improves, such artificial bookings will get eliminated. The problem has come down tremendously over the past six months. We are hopeful that the issue will be sorted soon,” says Dada.
There is still a waiting period for many car brands and models — the only question is who makes you wait longer! “The industry has been trying to tackle the semi-conductor shortage with changing production and sourcing strategies but it will still take time. The impact is causing many makers to drop certain features. Others are using the strategy of dropping trim levels. In many world markets, and across India as well, the dealers are choosing to display just one model and spec it with most features that would help them optimise profits. Naturally, this will affect the customers who go for low and mid-trim models,” says Koshy.
It is for the buyer to take the final call.
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