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New car story: Big is beautiful

autos Updated: Apr 06, 2013 01:30 IST
Sumant Banerji
diesel cars

A new trend is fast catching on in the domestic automobile industry and befuddling industry experts. Small cars are no longer the toast of the town, and it is bigger, more expensive (and often diesel) vehicles that are making up the numbers.

Prime examples of this trend are the Maruti Swift hatchback and its sedan version, the Dzire. The Swift registered a growth of over 20% in fiscal year 2012-13 and raced up the chart to the second position, behind only the Alto. The Dzire performed even better, growing by 54% to sit just behind the Swift. In the process, the two cars leapfrogged other smaller and less expensive products such as the Maruti Wagon R and Hyundai i10.

The entry-level small cars have cleared suffered. The Alto retained its position at the top for the eighth consecutive year, but its sales declined to under 300,000 units for the fiscal — a 14% fall. This is Alto’s lowest tally in three years.

Similarly, the sales of the Wagon R, the second largest selling car in 2011-12, declined by 8% and lost its position in the top 5. The Hyundai i10 too saw sales slide by 25%, even as its bigger sibling, the i20, saw an 18% growth during the year. http://www.hindustantimes.com/Images/Popup/2013/4/06-04-13-biz-23a.jpg

Reasons are multifarious, but the most obvious one is the slowdown in the economy and rising cost of living that impact the middle-income group — the traditional consumer of small cars such as Alto, Wagon R and i10 — more than others.

“The customer for an Alto, Santro or Wagon R is not buying a Swift. Instead he is holding back,” said Sugato Sen, senior director, Society of Indian Automobile Manufacturers (SIAM). “And the longer he holds himself back, the worse it would be for the industry.”

Another big reason is the rush in demand for diesel vehicles due to the fuel’s subsidised price as compared to petrol, which is de-controlled. The surge in sales of the Mahindra Bolero, XUV5OO, Toyota Innova and Maruti Ertiga are a direct outcome of this. The Bolero, in fact, now sits ahead of many small, cheaper cars. And the Toyota Innova has booted out the cheapest car in the world, the Tata Nano, from the top 10.