The Indian Hatchback

A Detailed Analysis of the Hatchbacks in the Indian Automobile Market(An Independent Study)

August 2010

04/10/23 2THE INDIAN HATCHBACK

Participants

A Segment

B Segment

B+ Segment

The Way Forward

THE INDIAN HATCHBACK

A hatchback is an automobile designed such that the boot is integrated with the cabin space.

04/10/23 3THE INDIAN HATCHBACK

•Spark•Aveo U-VA•Beat

Chevrolet

•Grande Punto

Fiat

•Figo

Ford

•Jazz

Honda

•Santro•i10•i20

Hyundai

•800•Alto•A-Star•WagonR•Zen Estilo•Ritz•Swift

Maruti Suzuki

•Micra

Nissan

•Fabia

Skoda

•Nano•Indica Vista

Tata

•Polo

Volkswagen

04/10/23 THE INDIAN HATCHBACK 4

The A-Segment covers entry level hatchbacks. These cars make for great city drives and are the first stepping stones for people graduating to cars. They usually feature sub 1 liter engines, are under 4m long and are priced between 1 to 3 lakh Rupees.

Competitors

The Maruti Suzuki Alto succeeded the Maruti 800 as the king of hatches. The car continues to be a favorite with buyers, as it continues to clock the highest sales figures across segments.

The Maruti 800 was the car that brought 4 wheels to India. It retains a strong emotional relationship with the customers and continues to woe its faithful followers.

The Tata Nano, the cheapest car in the world, has definitely generated a lot of interest. Waiting periods ran into months as the public queued up for a piece of the Nano pie.


Despite featuring only three cars, the A Segment accounts for 25% of total hatchback sales.

Source: Press Releases


Note: 1Ex-Showroom Price (Delhi) as on 7th August 2010

Value-for-money is the key to success in this price-sensitive segment. Fewer variants are offered with concerted efforts to keep base pricing as low as possible.


The small engines and low weights allow these cars to be very efficient.

Source: Society of Indian Automobiles Manufacturers (SIAM)


Source: Company Websites

UpcomingLaunches


• The entry level hatchback segment has been ruled by Maruti for decades now. But the Tata Nano has been able to rake in very good numbers as well. As customer confidence grows in the Nano, one can expect better sales.•Keeping the vehicle well priced, for the very price-sensitive entry level, is the key to

initial success. •Keeping the ownership costs low, in the form of maintenance , spares cost, and

efficiency is again of prime importance. •Buyers in this segment would rather compromise on interior quality, ride comfort,

and driving pleasure, than on the price, space and the VFM factor.•Having a well-established service network helps alleviate maintenance worries,

which are a carry forward from the 80s and 90s.

• Honda is developing an A segment offering• Bajaj and Renault-Nissan are developing a 1 lakh INR car to counter the Nano• Maruti might launch the Cervo in 2011• Hyundai plans to launch an 800 cc car in 2012


The B-Segment covers above entry-level hatchbacks. These cars perform best during city drives and afford most creature comforts deemed necessary by today’s customer. They usually feature 1 to 1.2 liter engines and are priced between 3 to 5 lakh Rupees.

Competitors

The Spark, a rebadged Matiz, has created steady sales for the last few years. The looks make it a favorite with women and the maintenance packages make for a value offering.

The Beat was launched by Chevrolet with the hope that it would change their fortunes. While that hasn’t happened, the Beat has definitely generated interest with its unique design.

i10 has been a raging success, taking off from where the Santro left. It is the market benchmark for quality and practicality. It has really strengthened Hyundai’s position in India.


Santro, the victor of the hatchback war of 1998, has seen many successful years. Even though the car is simply outdated now, it continues to sell decent numbers.

The Indica Vista was a welcome change from the erstwhile Indica. With an effort to move away from the taxi image, Tata gave it a new name, new style and tried to give it a personal car touch.

The Wagon R has always been hugely popular in India. With its new avatar, a new engine, new interiors… it just got better. Being the chart topper for July is no surprise.


A Star, or the Alto to the rest of the world, was the car that introduced us to the K10 engine which powers all A and B segment cars for Maruti today. The pricey car has not seen chart burning sales.

The second generation of the Zen Estilo saw it losing some of the character it was earlier criticized for. Although, it still does not rake in huge numbers, it is a respectable performer as far as sales are concerned.


The B-Segment cars post sales of about 60,000 units every month! Launch of the new Wagon R propelled sales


Companies offer a large range of variants, from basic to luxury, to target a larger audience.



Most ‘B’ segment cars are tuned with a focus on efficiency.




UpcomingLaunches


•Dominated by Maruti, with 4 offerings in the segment including the recently launched Alto K10, the B segment is a lucrative market to tap. This segment has seen quite a bit of activity recently. • The keys to success remain the same as with the A segment, with fuel efficiency and

reliability taking the crown. •Customers look for a few creature comforts as well, and good interiors coupled with

a stylish design can pull in the younger buyer.•Mostly these cars find use in the city, hence ease of driving and good efficiency are a

big advantage. • The general absence of diesels in this segment can be one of the ways to enter the

market. The bottleneck remains the cost of development and deployment for small capacity diesels.

• Fiat India’s small car• Hyundai i10 and Santro diesels• Volkswagen UP


The B+ Segment covers the entire range of premium hatchbacks. These cars are just at home on the highway as they are in the city. Most new hatchbacks are launched in this segment. They usually feature engines above 1.2 liter and are priced between 4 to 7 lakh Rupees. Undoubtedly, with the Indian buyer getting richer, the B+ segment is where all the action is.

Competitors

The Ritz was launched in May 2009 as a conservative alternative to the hugely popular Swift. The car has been well-received despite the oddball rear as it proves to be a practical choice.

The Swift has been a rage in India ever since its launch. A powerful yet fuel-efficient car that meets everyone’s requirements; the Swift makes up for almost half the cars sold in this segment.

i20, Hyundai’s offering in the B+ Segment, has introduced the Indian middle class to quality. With interiors shaming cars two segments above, the cosmopolitan Indian is ready to pay the premium.


Chevrolet’s initial attempt to capture the market, in the form of the Aveo U-VA, pretty much failed. The car was never bang-for-buck, despite its roomy interiors and well-sorted ride.

The Grande Punto rescued Fiat in Europe. It hasn’t been able to do the same in India yet. The beautiful car does well on most counts, but Fiat’s old reputation is an albatross around its neck.

Figo, Ford’s latest offering, has certainly created a blast in the market. The car is viewed as value-for-money and has been clocking more numbers than the rest of the Ford lineup combined.


The Polo had been the most ‘looked forward to’ launch this year, and it didn’t disappoint. Offering the hatch buyers a shot at owning a ‘real’ German car; Polo saw heavy bookings, but few deliveries.

Skoda’s Fabia was never a numbers player in the market. Marred by unfortunate glitches and an inflated price tag, this deserving car never really took off.

Honda’s Jazz is another car that has seen very poor sales owing to its irrational pricing. With most SUVs coming cheaper, the ‘space’ sales point never really struck a chord with the public.


The B+ Segment is attracting all companies, with almost all fighting for a piece of the premium hatchback pie.


Figo moved to the 2nd place within a month of its launch.

B+ segment car prices often compete with entry level sedans’.



Diesel hatches are favorites for people looking for economical long-distance city rides.



Hyundai’s ‘Kappa’ engine leads the pack in fuel efficiency.



The premium diesels offer stunning fuel efficiency coupled with the low cost of fuel.






UpcomingLaunches


• Toyota Etios• Volkswagen Golf• A revamped Swift with a new engine and exteriors• A revamped Chevrolet Aveo U-VA with a diesel variant

• The B+ segment is where all the action is. Maruti again maintains a strong hold with its dual offerings: Swift and Ritz.• The customer here is usually buying his second car, specifically for the city, or is an

experienced buyer. • Important factors can range from exclusivity, premium image to practicality and

reliability. •With a wide range of customer audience, positioning of the vehicle vis-a-vis the right

customer bucket is essential for success. • This diversity is illustrated by the success of Ritz, Swift and Figo which play on the VFM

factor. •On the same level, premium offerings like the Polo and i20 are tapping into the market

share as well.• Pricing is a factor that must not be ignored as has been clearly illustrated by the Jazz’s

inability to rake in numbers.


•Currently hatchbacks account for over 70% of all passenger cars sold and the segment is growing at rate above 30% annually.•A Segment

Competitive pricing and providing the basic necessities are of key important. New launches should focus on keeping costs low, without compromising on – fuel

efficiency, space and safety.•B Segment

New launches can look to differentiate themselves on features, practicality and comfortable ownership, apart from maintaining competitive price points.

•B+ Segment Higher than expected sales speak for the acceptability of the premium hatch. New launches must come across as viable alternatives to sedans and should offer:

Suitability for city driving along with the advantages of sedan-like space.More customers are looking for safety features.

Focus should be on either premium or practicality. Good quality and performance at a reasonable high price is accepted by a niche but

ever-growing customer base.Value-for-money and practicality will continue to be of prime importance to the

majority of Indian buyers.

Automotive

The Indian Hatchback