India (Part 2): OEMs plan to launch models with strong local potential

Stagnant Tata, Mahindra, GM, Ford and VW strive to gain market share



 This report on India (Part 2) contains recent activities of OEMs operating in India. They all see great growth potential in the Indian market. Many automakers plan to launch new models and have announced medium- to long-term plans to strengthen their respective businesses and market share in India. Indian manufacturers such as Tata Motors and Mahindra & Mahindra are suffering from stagnant market share growth for the past three to four years. Foreign manufacturers such as GM, Ford and VW are also aiming to expand their market share. Thus, competition in the Indian market is expected to be fiercer.

 In October 2014, the market leader Maruti Suzuki launched the CIAZ mid-size sedan. While small cars will continue being its main line of products, Maruti Suzuki plans to expand sports utility vehicle (SUV) and multiple purpose vehicle (MPV) lines as well. The company is also considering launching light commercial vehicles (LCVs). Hyundai Motor will reduce export to Europe starting in FY 2014-15 and increase production of all-new models for the local Indian market.

 Among the local automakers, Tata Motors has been losing market shares because of sluggish sales of the Nano and supply shortage of other all-new models. The company has now decided to launch a broad range of models. Mahindra & Mahindra, another local automaker, is strengthening its area of specialty, the utility vehicles (UVs).

 As for Japanese automakers, Honda is doing well due to successful sales of all-new models that were launched in the past few years. Toyota reportedly will renew IMV (Innovative International Multi-purpose Vehicles) series of SUVs and minivans and is developing mid-size passenger cars. In March 2014, Nissan launched the Datsun GO, a strategic model for emerging markets, but it only sold 8,503 units in April-September 2014. Isuzu plans to start local production of pickup trucks in India in 2016.

 Among European and American automakers, General Motors, Ford and Volkswagen (VW) have been losing their shares. They are now planning to regain lost ground by launching new models that are compatible with India's market.

The CIAZ mid-size sedan launched in October 2014 by Maruti Suzuki (all photos in this report were taken during the Auto Expo 2014 held in February 2014). The Zest compact sedan launched in August 2014 by Tata Motors
Etios Cross Adra Concept
The Etios Cross, Etios-based crossover model launched in May 2014 by Toyota The Adra Concept developed by GM to compete against Ford EcoSport and Renault Duster

 Please refer to the following reports about the recent trends of Maruti Suzuki, and an overview of India's market and automobile segmentation by Society of Indian Automobile Manufacturers (SIAM):

Related Reports:
Suzuki: Plans to sell 3 million units in India and increase local ASEAN production (October 2014)
India (Part 1): Extension of reform measures drives sales growth (October 2014)

Tata Motors: to launch broad range of all-new models

 Tata Motors is an automobile manufacturer that belongs to Tata Group, the largest industrial conglomerate in India. It has around 50% share in India's commercial vehicle market. Its sales were USD 38.9 billion in FY 2013-14. The company acquired Jaguar and Land Rover in 2008.

 Tata Motors launched the Nano, the lowest-priced car in India, in 2009 but it did not sell as well as expected. Without other promising all-new model launches, the company's passenger vehicle sales plummeted from 370,834 units in FY 2011-12 (14.2% market share) to 198,812 units in FY 2013-14 (7.9% share).

 To pull out of the slow business, Tata Motors has changed its policy to launching a broad range of passenger vehicles. The company will launch the Indica-based Zest sedan and the Bolt hatchback in 2014 under the new policy. Tata Motors also plans to launch all-new models ranging from low-priced mass-produced cars with a price tag of INR 300,000 to INR 400,000 to premium hatchbacks.

Tata Motors: to launch a broad range of all-new models

Movus  The Movus, a new entry-class UV, was launched in June 2014. It is 4421mm long, 1780mm wide and 1940mm high. It seats 7 to 9 passengers. Powered by a 2200cc diesel engine, it has a fuel efficiency of 15.6km/liter with a starting ex-showroom price of INR699,000. The Movus was released as a successor to the Sumo Grande.
Zest sedan  The Zest compact sedan was launched in August 2014. It is 3995mm long, 1706mm wide and 1570mm high, and is powered by a 1193cc turbocharged petrol engine or 1248cc turbocharged diesel engine along with a standard 5-speed manual transmission. The 5-speed automated manual transmission (AMT), jointly developed with Magneti Marelli, is available with the diesel version. The Zest sedan has a starting ex-showroom price of INR 464,000 (petrol version) and INR 564,000 (diesel version).
Bolt hatchback  The Zest-based Bolt hatchback will be released in the fall of 2014. It has the same overall length and the same engine as the Zest. The engine is mated with a 5-speed manual transmission. Its price ranges from INR 420,000 to INR 660,000. The Bolt hatchback is said to be a successor to the Indica Vista hatchback currently sold in the market.
Nexon Concept  The Nexon Concept, a compact SUV concept, was exhibited at the 2014 Delhi Auto Expo. Tata Motors plans to develop a new SUV that is shorter than 4 meters to be eligible for a lower excise duty application.
New Compact
production model
 Tata Motors is developing a new production model that will be positioned above the Nano but priced between INR 300,000 to INR 400,000. It will be released in 2015 at the earliest to compete against the Maruti Wagon R and other vehicles. The new vehicle reportedly is being developed partially to make effective use of the new production line that was added to the Sanand plant in order to produce 20,000 units of the Nano a month.
 Tata Motors reportedly will launch a hatchback model belonging to a higher class than the Bolt sometime between the end of 2016 and early 2017. The company is developing a new platform as well as new petrol and diesel engines for the new hatchback and derivative models.
(Notes) 1. The ex-showroom price includes the dealer's purchasing price, margin and tax, and does not include charges such as vehicle registration and insurance.
2. The prices of Mahindra models apply to the city of Mumbai. Other prices apply to the city of Delhi.



Mahindra & Mahindra: to strengthen UV lineup and open technical center in U.S.

 Mahindra is the largest manufacturer of UVs in India. The company held 41.7% share in the UV market in FY 2013-14, and 36.6% share in April-September 2014 in the UV segment. It acquired Reva Electric Vehicles in 2010 with a new focus on electric vehicles. In 2011, Mahindra acquired Ssangyong Motor, a Korean manufacturer of SUVs. The company launched the all-new Scorpio in September 2014. It is developing three additional UV models at present.

 Mahindra has set a goal to become one of the leading global automakers within the next decade. In May 2014, the company opened Mahindra North American Technical Center (MNATC) in the State of Michigan, the U.S.

Mahindra & Mahindra: Developing four all-new UVs

All-new Scorpio  The Scorpio SUV is a popular SUV that was launched by Mahindra in 2002 and sold 450,000 units to date. Its all-new model was launched in September 2014. It is built on a totally revamped platform including the transmissions and front suspensions. Equipped with a 2200cc diesel engine, the new Scorpio features cutting-edge technologies such as a touch-screen infotainment system with a built-in GPS. The S2 basic model has a starting ex-showroom price of INR 798,000 in Mumbai.
Developing three new UVs  Mahindra is developing three additional UV models slated for market release by 2016. A compact SUV slated for launch in 2015 will compete against the Ford EcoSport. A higher-class SUV will share the platform with the X100, which was originally developed by Ssangyong that the company acquired in 2011. The third UV will be the all-new Bolero.
North American Technical Center  In May 2014, Mahindra opened Mahindra North American Technical Center (MNATC) in the State of Michigan, the U.S. Initially, 40 engineers will be recruited and will be responsible for developing platforms for vehicles that Mahindra will launch in global markets. The first will be an MPV that Mahindra will sell in India and other parts of the world starting in 2017.
Additional investment in the Chakan plant  In August 2014, Mahindra announced an additional investment of INR 40 billion in the Chakan plant in the next seven years. The fund will be used for the plant equipment, product development and production capacity expansion. The total investment in the Chakan plant will reach INR 80 billion and the plant's capacity will be increased to 750,000 units a year.
 Mahindra planned to operate under the vision of integrated manufacturing from stamping, coating, to final assembly of all vehicles in all segments. The company completed a new plant in Chakan in Maharashtra state in India. Production at the new plant began in March 2010 with an initial capacity of 300,000 units. Currently, the Chakan plant is mainly producing mid- to large-size commercial vehicles. In addition to the Chakan plant, Mahindra has plants in Nashik in Maharashtra state and in Haridwar in Uttarakhand state.



Hyundai Motor: to reduce export to Europe and to focus more on local sales in India

 Hyundai Motor is the second largest automaker only next to Maruti Suzuki and the top exporter in India. The company sold 380,000 units in India and exported 253,000 units in FY 2013-14. However, Hyundai Motor will discontinue exporting several tens of thousands of the i10 and i20 to Europe and concentrate on the local market in India in FY 2014-15. The company launched four all-new models in India in January through August 2014. Discontinuation of the export of the models for Europe will promise sufficient capacity to produce the new models in India. Hyundai Motor will concentrate on the local market judging that Indian consumers have regained consumer confidence. The company's share in India's passenger vehicle market in April-September 2014 increased from 15% to 16.2% year-over-year (y/y).

 The discontinued supply of the i10 and i20 for European markets will be managed by Hyundai's plants in Turkey and Czech. The company explains this decision as a means of full utilization of its global production capacity. Moreover, Hyundai cannot let the labor disputes at the Indian plant cause delay of supply for Europe which is one of the important markets for the company.

Hyundai Motor: Launching all-new SUVs and compact and mini segment models

Santa Fe  In February 2014, Hyundai launched the all-new (third-generation) Santa Fe SUV and exhibited the same model at the Auto Expo 2014. The previous models were imported from Korea, but the new model will be produced locally in India. The 7-seater SUV is powered by a 2200cc diesel engine mated with 6-speed manual or 6-speed automatic transmissions.
Xcent  In March 2014, the company launched the Xcent, a compact class family sedan. It is a sedan variant of the Grand i10 hatchback and has the overall length of 3995mm. The Xcent is powered by a 1100cc petrol or 1100cc turbocharged diesel engine and mated with a 5-speed manual transmission. A 4-speed automatic transmission is also available for the petrol version. The Xcent is priced from INR 466,000 to INR 738,000.
Eon 1.0L  The Eon mini class hatchback on roads is powered by an 800cc engine. In May 2014, Hyundai launched the Eon hatchback powered by a 1000cc engine mated with a 5-speed manual transmission. It has a starting ex-showroom price of INR 383,000 in Delhi. The Eon is a mini segment passenger vehicle with the overall length of 3495mm.
Elite i20  Hyundai exhibited the second-generation i20 at the Paris Motor Show in October 2014. Its Indian version was released for sale in August. The Indian model has the sub-name of "Elite" to emphasize its premium impression. It has the overall length of 3985mm and is powered by a 1.2-liter petrol or a 1.4-liter diesel engine mated with a 5-speed manual transmission. The Elite i20 has a starting ex-showroom price of INR 489,900 (petrol version) and INR 609,900 (diesel version) in Delhi.



Toyota: planning Etios-based mid-size sedans

 Toyota has an annual capacity to produce 310,000 vehicles in India. The company is producing passenger cars such as the Corolla Altis, Camry, Etios sedan, and Etios-based Liva hatchback, as well as the Innova MPV and Fortuner SUV in the IMV series. Toyota is selling the imported Prius and Land Cruiser Prado in India.

 However, Toyota's unit sales of passenger vehicles (including the IMV series) in FY 2013-14 fell from 165,504 in the previous fiscal year to 128,811 units. Its market share also fell from 6.2% to 5.1% over the same period. The decline is due in part to the plant shutdown that lasted for a month because of the labor disputes on wages in March to April 2014.

 In May 2014, Toyota launched the all-new Corolla Altis and the Etios Cross, a crossover model in the Etios series. Toyota's plans for India include a launch of an all-new IMV in 2015, and development of a mid-size sedan that will fall between the Corolla Altis and the Etios. It has been reported that Toyota will launch new diesel engines in 2020 as part of the company's TNGA (Toyota New Global Architecture) strategy.

Toyota's product plans: Renewing IMV series, planning all-new mid-size sedan development

Corolla Altis  In May 2014, Toyota launched the all-new Corolla Altis powered by a 1800cc petrol or a 1400cc diesel engine mated with a CVT or 6-speed manual transmission. The Corolla Altis has an ex-showroom price of INR 1,199,000 to INR 1,689,000 (for the petrol version) and INR 1,307,000 to INR 1,668,000 (for the diesel version).
Etios Cross  In May 2015, Toyota launched the Etios Cross, a crossover model in the Etios series. It is already being sold in Brazil where it is well received by customers. It has the overall length of 3895mm and is powered by a 1200cc or 1500cc petrol engine or a 1400cc diesel engine. Its sales targets are young people. The Etios Cross has an ex-showroom price of INR 595,000 to INR 735,000 (for the petrol version) and INR 714,000 to INR 744,000 (for the diesel version).
IMV Series  Toyota plans to renew the IMV series in 2015. The company builds and sells the Fortuner SUV and the Innova minivan in the IMV series in India.
All-new mid-size sedan  Toyota reportedly is developing an all-new mid-size sedan for the Indian market. The new model will be positioned between the Corolla Altis and the Etios and built on the Etios platform. It will be launched toward the end of 2016.
 The mid-size sedan will fit in the "mid-size" segment in SIAM's classification. This segment sold 77,408 units in April-September 2014 including 35,047 units of Honda City and 17,857 units of Hyundai Verna.



Renault-Nissan Alliance: launches Datsun GO but facing slow sales

 The Renault-Nissan Alliance produced 220,000 units in FY 2013-14 at their plant in India. They sold 96,000 units locally in India and exported 131,000 units.

 In March 2014, Nissan launched the Datsun GO in India. The GO has the overall length of 3785mm and is powered by a 1200cc petrol engine, which puts it in the compact segment. However, it has a very low starting ex-showroom price of INR 312,000 in Delhi, achieving a price level in the mini segment. Nissan plans to launch a total of three Datsun variants in India. The Datsun GO will be followed by the 7-seater Datsun GO+ in the second half of 2014 and an ultra-low priced model (priced from INR 200,000 to INR 300,000) in 2015.

 However, Nissan's Datsun GO only sold 8,503 units in April-September 2014. The Tata Nano sold 6,365 units during the same period and outsold the Datsun GO in July and September. It has been reported that the Datsun GO's slow sales resulted from the negative image of the "low-priced model" as was the case with the Tata Nano. Nissan hopes to increase the ratio of the Datsun brand vehicles in Nissan's sales volume in India to one third and further to one-half. Nissan also hopes to increase the company's market share in the passenger vehicle market from 1.5% in FY 2013-14 (2.1% in April-September 2014) to 10% in FY 2016-17.

 Incidentally, the Datsun GO+ Panca, a multi-purpose vehicle that was launched in May in Indonesia, sold 6,062 units in three months from June to August. The GO Panca hatchback that was launched in September is reportedly selling well too. The Datsun brand models are developed by country basis to meet specific needs in each market.

 Renault sold 21,073 units in India in April-September 2014 (down 31.9% y/y). Over 90% of them were the low-priced Duster SUV.

Sales volume of Datsun brand models

March April May June July August September
India Datsun GO 3,433 2,691 1,992 1,097 607 1,098 1,018
Indonesia Datsun GO+ Panca 1,024 1,886 1,935 2,241 -

Source: MarkLines Data Center

Please refer to the report "Nissan develops "Datsun" car brand for emerging markets" (April 2014) for details on Nissan's Datsun brand.



Honda: increase sales by 47.9% to 88,200 units in April-September 2014

 Honda sold 134,339 units in FY 2013-14, up 82.8% y/y. The top contributors to sales increase were the diesel-fueled Amaze launched in April 2013 and the all-new City launched in January 2014. In July 2014, Honda launched a 7-seater MPV, the Mobilio. Honda sold 88,200 vehicles including the Mobilio in April-September 2014, up 47.9% y/y. Honda has set a goal to sell 300,000 units in India in 2016.

 Production of the Amaze started in 2014 at the second plant having an annual production capacity of 120,000 units. Production of the City was transferred in July from the first plant to the second plant.

 Honda discontinued production of the Civic in April 2013, and of the Accord in December of the same year, due to their sluggish sales. In the meantime, Honda will concentrate on the hot-selling models such as the Amaze and the City. The company will launch the all-new Jazz (sold as the Fit in Japan) by March 2015.

Honda's new model launches

Sep. 2011  It is powered by a 1200cc gasoline engine and produced locally in India.
(Brio-based sedan)
Apr. 2013  It is powered by a 1500cc petrol or 1500cc diesel engine.
All-new City Jan. 2014  It has an overall length of 4440mm. It is powered by a 1500cc petrol or 1500cc diesel engine.
(Brio-based MPV)
Jul. 2014  The 7-seater Mobilio MPV, powered by a 1500cc petrol or 1500cc diesel engine, was developed by Honda's technical development center in Thailand. The Mobilio is 4386mm long, 1683mm wide and 1603mm high and features a sporty styling and spacious cabin with greater comfort and utility.
All-new Jazz By Mar. 2015  20 to 30% cost reduction is expected from the current model.


Second plant in India starts operations

 In February 2014, production of the Amaze started at Honda's second plant in India that was built in Tapukara in Rajasthan state. The integrated plant has forging, stamping, painting and molding lines as well as a powertrain production line. It has annual capacity to assemble 120,000 units of vehicles. This has increased Honda's production capacity in India to 240,000 units. Production of the City was transferred from the first to the second plant in September 2014.



Isuzu: to build pickup trucks in India; expected to develop MPVs

 With regard to the light commercial vehicle (LCV) business, Isuzu sees Thailand as its LCV base and India as its LCV support base.

 Isuzu was building pickup trucks and derivative SUVs in Thailand. In March 2013, Isuzu began their import and sales in India. Isuzu currently imports complete knockdown (CKD) kits from Thailand, and Hindustan Motors conducts CKD production based on an agreement with Isuzu. Isuzu plans to build its own plant and sales network in India and start production at the new plant in 2016. It has been reported that Isuzu will start producing a 7-seater MPV also at its own plant in 2016.

Isuzu: to start building pickup trucks in 2016 with plans to produce low-priced models as well

Imported vehicle sales and consignment production  In March 2013, Isuzu began imported vehicle sales of the D-MAX pickup truck and MU-7 SUV in India. In December 2013, Isuzu began CKD production under consignment arrangement with Hindustan Motors, a local manufacturer (CKD sets are imported from Thailand). Isuzu is building a sales network for selling the vehicles.
Local production of pickup trucks in India  In March 2013, Isuzu signed a memorandum of understanding with the government of Andhra Pradesh state located in southern India regarding production of vehicles in that area. The company has already acquired land for building a new plant which will be the main base to produce LCVs. According to Isuzu, demand for pickup trucks in India has grown to 200,000 units a year.
 The new plant is slated for starting production in the spring of 2016 with an initial capacity of 50,000 units a year. The plant will produce the D-MAX and its derivative MU-7 SUV that are currently produced in Thailand. Isuzu plans to increase the plant's annual capacity to 120,000 units by 2020 and launch more affordable models which are 20 to 30% cheaper than the D-MAX. The local parts procurement ratio will start at 70%, but Isuzu plans to increase the ratio to 100% within three years to win cost competitions.


Reportedly developing all-new MPV

 It has been reported that Isuzu will start producing a 7-seater MPV in October 2016 at the company's own plant which is under construction in Sri City in the state of Andhra Pradesh. The MPV market scale in India is 130,000 to 140,000 units a year. The market leader is Toyota's Innova that sold 31,000 units in FY 2013-14.



GM and Ford: planning to regain lost market share in India

 General Motors held a 2.3% share in the passenger vehicle market in India in April-September 2014. The share is declining year after year from 4.5% in FY 2009-10. Ford's market share has also declined from the recent peak of 3.9% in FY 2010-11 to 3.3%. The two companies lack necessary measures for the highly cost-oriented Indian market. It is said that they are not prepared to compete in India as they are allocating more resources in far larger markets such as Europe, the U.S. and China. Another negative factor is the recalls of 114,000 units by GM and nearly 300,000 units by Ford in India in 2013.

 GM and Ford are planning to regain lost ground in India. To prove their decision, GM exhibited the Adra SUV Concept and Ford exhibited the Figo Sedan Concept at the 2014 Delhi Auto Expo.

 In terms of medium-term plans, GM plans to launch 20 all-new or redesigned models in India in the next six years. In September 2014, Ford announced plans calling for aggressive investment in Asia and turning China, Thailand and India into its three production centers.

GM and Ford

GM Adra Concept  GM exhibited the Adra, a compact SUV concept, at the 2014 Delhi Auto Expo. "Compact SUV" is a rapidly growing segment and the Adra is said to compete against Ford's EcoSport and Renault's Duster.
Ford Figo Sedan Concept  Ford is expected to launch the Figo Sedan within a year. Its concept was exhibited at the 2014 Delhi Auto Expo. A hatchback version of the Figo is already in the market. The Figo Sedan Concept was developed based on Ford's "One Ford" policy. It is shorter than 4 meters and is said to compete against Honda's Amaze and Maruti Suzuki's DZIRE. Its production is expected to start in India within 2015.



VW: to invest INR 15 billion in Indian business for next few years

 VW held 2.2% share in the passenger vehicle market in April-September 2014 (down from 3.3% in the same period of the previous year). VW's share once was 4.4% in FY 2011-12 due to a success with the VW Vento and the Skoda Rapid that were launched in 2010-11 (both belong to the mid-size segment in SIAM's classification). However, VW is not taking necessary actions to respond to the excise duty cut policy of the Indian government for small vehicles. The VW Polo is the only model with the overall length of less than 4 meters and is sold in India by VW Group. VW does not even sell compact SUVs in India.

 In July 2014, VW announced plans to invest INR 15 billion (USD 250 million) within the next 5 to 6 years and increase its production capacity in India from 130,000 to 200,000 units a year. The company is considering launching new passenger cars and SUVs with the overall length of less than 4 meters. In this regard, VW exhibited the Taigun, a SUV concept based on the small up!, at the 2014 Delhi Auto Expo.

 The company also plans to start producing 1500cc diesel engines at its plant in India to save import duties.



Three luxury brands in Europe: Strong sales supported by well-to-do class

 Mercedes-Benz, BMW, and Audi of the VW Group, collectively referred to as the three luxury brands, are doing well with the growing demand among the wealthy people in India.

 In January 2014, after two-decade operations in India since 1994, Mercedes-Benz's 50,000th car rolled off a local production line in India. The company has been producing the C-, E-, ML-, and GL-Class cars in India. Production of the S-Class began in March 2014. Local production of the A- and B-Class is also planned. Toward this goal, Mercedes-Benz will double the production capacity of the Chakan plant in India from 10,000 to 20,000 units.

 BMW released the 1-Series in September 2013 and the all-new X5 in May 2014. Both models are produced at the Chennai plant. Currently, the 1-Series, 3-Series, 5-Series, 7-Series, X1, X3 and X5 are being assembled at the Chennai plant. The plant has an annual production capacity of 11,000 units which will be increased to 14,000 units.

 Audi, a VW Group company, started production of the A3 Sedan in July 2014. The A3 is Audi's sixth local production model in India after the A6, A4, Q5, Q7, and Q3. It sold 10,000 units in 2013 making Audi the first luxury brand to top the annual sales mark in India.

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