Tata Punch became the best-selling passenger vehicle in India for H1 2024 (Jan-June 2024). 5 SUVs/Crossovers occupy the top 10 ranking, followed by 3 hatchbacks, and only one MUV and sub-4m sedan, each. The top 30 products command 85% of the Indian PV market share. 21 of the top 30 products had some form of discount on MY24 products.
Prelude: Understanding Product-life-cycle (PLC)
In the automotive industry, each generation of product has two distinct phases in the product-life-cycle (PLC). Phase one starts with a new generation launch based on a completely new platform or modified existing platform or the same platform with a different body shell, followed by successive model year (MY) changes - mostly limited to feature upgrades to keep up with consumer’s expectation and continuously defend territory from competition. Phase two starts with a facelift (FL), again followed by successive MY changes. Extent and depth of FL and feature updates depends on the company’s vision and past performance of the product in the competitive landscape. Ideal PLC timeline in India is 3+3, i.e facelift after 3 years of launch and generation change after the next 3 years. Usually, a single platform supports two generations of products and varies widely based on the manufacturer’s platform development strategy. MUVs typically have long PLC due to their utilitarian aspect.
Discount or sales promotion is a tactical approach to meet the value perception of the target customer segment. As products age during the product-life-cycle, it may need higher discount provision in business case to counter competitive challenges which change from time to time. Hence incremental discount with product aging is always provisioned in PLC business case. So, the products selling with the least or no discount deliver better value to the customer and in turn create more value for the manufacturer’s investors. However, if products fall short of customer segment expectation, there will be a call for higher discount to lower transactional price and match customer value expectation and push product out of the showroom, thus eroding profit margin, worsening business case and in extreme case, discontinuation of product from market.
Discount is also used as a tool to support sales in declining product segments or adverse market situations to support volume to cover fixed costs. Extent of discount will again depend on product’s inherent strength and weakness.
360⁰ Performance evaluation
Based on these key parameter of PLC, we came up with a comprehensive 360⁰ evaluation method, which takes into account several key aspects to know the correct health of the product in competitive landscape.
PLC timeline : Longer PLC usually means higher discounts in later phase, successful products are exception
Discounts on offer : Manufacturer/dealer sales push indicator
Market share growth : Acceptance among customer segment
Volume growth : This need to be seen in tandem with discount
Waiting list : Proxy for quality of demand generation
Rating system: best first
Outstanding: Exceptional performer
Good
Average
Below Average
Analysis
The dominance of Maruti in the top-10 list has come down as it has only six products, followed by Tata, now with two products, Hyundai and Mahindra, with one product each
SUVs, MUVs, and crossovers are now taking over the top ranks from hatchbacks and sedans
Maruti
Fronx, Ertiga, and Dzire were key volume growth drivers for Maruti in H1 2024
CNG vehicle demand in the fleet segment was a major contributor to sales of Dzire (52% mix) and Ertiga (58% mix)
Ertiga production capacity was expanded in 2024 and it was selling with negligible discounts in 2024
Maruti Baleno + Toyota Glanza (= 1,20,176) is the best-selling car in India from product per se
Sales of Grand Vitara and Brezza were steady, with the former getting huge discounts in the hyper-competitive Mid-SUV segment
All Maruti hatchbacks witnessed a drop in sales despite several promotion schemes from Maruti
Maruti Alto is now relegated to the No.15 rank, which until 2017 was the Numero Uno product for 15 long years!
Hyundai-Kia
With a major facelift in 2024, the Hyundai Creta remains the best-performing product here
Exter was the major volume growth driver for Hyundai, though it was under constant pressure due to Tata Punch
Hyundai also suffered a volume drop among its hatchbacks
Despite recent product updates, Kia lost sales as it was not offering any discount in H1 2024
Tata Motors
The addition of CNG (33% mix) and EV (14% mix) drivetrain made Tata Punch the best-selling car in the Indian car industry for H1-2024
Entry of Mahindra 3XO facelift has affected sales of Tata Nexon facelift really hard in the last two months of H1 2024
Mahindra
Scorpio N, along with the Classic version, has secured 8th position in 2024, and average sales crossed the 14,000 mark
Responding to market demand Mahindra took a big price cut for the top-end AX7 version of the XUV 700
Thar continues to grow further in 2024 and defeated Maruti Jimny fair and square
Toyota
Strong-Hybrid products – Innova Hycross and Hyryder - were key volume drivers for Toyota
Innova overall has remained uncontested so far with its diesel (39%) and strong-hybrid (49%) drivetrain offerings
H1-2024 New technology and feature focus
ADAS Level-2
Mahindra has further democratized ADAS-L2 by offering it on the recently facelifted XUV 3XO, which falls into the ~4m SUV/Crossover segment. Mass market players are moving much faster in technology adoption, innovation, and democratization, leaving luxury car makers behind in India. Luxury car makers don’t offer ADAS-L2 in their entry- or mid-segment luxury products that touch a ₹ 1 crore price tag these days.
Panoramic sunroof
Here also Mahindra introduced a twin-glass pane panoramic sunroof for the ~4m SUV/Crossover segment, making it more accessible and in line with the aspirations of Indian car buyers.
Overall, such efforts reflect a trend toward making high-end features available in more economical and accessible segments, challenging the luxury market’s traditional approach.