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Old 4th February 2014, 13:52   #1
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Default The great Indian SUV void in the Rs. 15 lakh space

Its raining SUVs. There is the Duster, the Terrano and the Ecosport in the small space. Many others are also vying in the sub 10L area.

Similarly, do you have around 20L. You will have SUVs from Toyota, Rexton, Ford, Chevrolet,Mitsubishi... The list goes on.

But did you check out the 15L space recently. What do you get if you are willing to spend 13-16L ex showroom. The middle range between the 20L and the sub 10 Lakh brackets.

Just a couple of options from Tata and Mahindra. Of course, there is the also ran Force motors somewhere, but thats about it.

The market is clamoring for the sub 10L and the 20L+ range, leaving a big void in the around 15L range.
Why so? Why are most manufacturers ignoring this segment? The golden rule of marketing is that when the bottom gets crowded, you have to find a new domain where there is little competition, and the 15L segment is ripe for taking by SUVs.

There are very few options in the full size 15L SUVs with bells and whistles like 4x4, ABS Airbags in this price bracket, and Tata and Mahindra rule the roost, with Mahindra making most of the sales with its XUV500.

Are the bigwigs ignoring this segment because they are too blinded by the lure of Small SUV space?
World over, Toyota/Honda and others have a slew of smaller but still full size SUVs placed lower than the big 7 seater options, but not here.

And its not that none of them have anything in their stable.
Tata has the defender which can fit nicely here
http://www.team-bhp.com/forum/4x4-ve...here-tata.html (Land Rover Defender: Bring it here, Tata!)

Toyota has too many to even count. Fortuner is a 24L ex showroom vehicle which goes into high segment

Then there is Ford, with the 24L Endeavor. Its international stable has lots of smaller vehicles which can fit in the 15L bracket.

Same can be said for the General.
And then their is Honda, with its high priced petrol CRV, they are in the sidelines. With the new diesel engine ready, they can also target this segment.

But none of them seem to be looking here. Are they being sensible in targetting the small SUV pie. Remember, there are only so many buyers. If everyone comes to small SUV segment, eventually no body is going to beat the 1500-2000 sale mark.

To really grow, you need to cover the entire range of the market, and even companies who have ready products in stock are simply ignoring this big market.
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Old 4th February 2014, 14:06   #2
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Default re: The great Indian SUV void in the Rs. 15 lakh space

I really do not have any hopes of any proper SUV/Crossover from International brands this side of 20 lakh rupees. Only possible candidate i hope for is Nissan Qashqai. I really have no hopes from Hyundai in regards to the new Tucson, even it comes they wont be able to price it much lower than Sonata considering even the Elantra now costs close to 20 L rupee mark. We can expect some more stuff from Ssangyong, but Mahindra may not allow them, as they might cannibalize XUV/Scorpio sales.

Talking about proper Chassis based trucks, GM has shelved plans for their Chevy Trailblazer, as it was not fitting their current paint-shop and they were not really keen on upgrading the assembly line. I expect Next Gen Ford Endeavour's pricing to be close to Fortuner's mid 20's mark.

Yes there will be a few more Sedan on stilts, 2wd only, baby SUVs coming close to 10L rupee mark.

A dream come true for us enthusiasts would have been a CKD Jeep Wrangler, positioned sensibly.

Last edited by .anshuman : 4th February 2014 at 14:10.
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Old 4th February 2014, 14:07   #3
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Default re: The great Indian SUV void in the Rs. 15 lakh space

Interesting point.

As an EcoSport owner, I'd gladly pay more for the Euro-spec EcoSport - with better interiors and kit, and maybe a slightly larger EcoBoost engine thrown in.

The only drawback would be that the price range of the EcoSport would expand, which might not be appealing to buyers.

That's where you're alluding to other products from their stable, like the Kuga or Escape, I suppose.

Ford's dilemma would be whether to grow their EcoSport portfolio upwards, or the Endeavour downwards, or bring in a whole new model. Having seen the lead time for their EcoSport and Figo sedan, I wouldn't hold my breath for them to be the trendsetter here.
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Old 4th February 2014, 14:15   #4
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Default re: The great Indian SUV void in the Rs. 15 lakh space

A very valid point there. All those who started out to cater the 12 - 15l segment either outpriced themselves or gave a package which did not justify the offering.

A case in point is the very competent Skoda Yeti. The vehicle has everyting that a SUV can ask for 4x4 , hill descent et all but the package turned out to be anything but VFM. Added to that the Skoda horrors and people just stayed away from it. If we look at the Duster pack, though at around 13l plus range it is definitely not worth that money at all.

However if we look at the Indian players, we do have the XUV and now with the W4 variant gives a lot of bang for the buck. But are we talking here of only non Indian players, if so then definitely there is a void that can be filled.

Come to think of it a lot of mid segment sedans easily hover around 12-14l on road (read Verna, new City etc) and many in this segment would love to go for a SUV instead if it is offered in the same price range. Looks like most of the manufacturers only have a herd mentality and rush to the direction where there seems to be a big success tasted by some.

Last edited by tsk1979 : 4th February 2014 at 14:42. Reason: corrected heard to herd
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Old 4th February 2014, 14:49   #5
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Default re: The great Indian SUV void in the Rs. 15 lakh space

A very valid question for 2014 answers to which may lead to something getting developed in next couple of years. I am in the market for a sub 15 Lakh SUV, something that defines "SUV" in terms of looks and specs. The only offerings I can choose from are those from TATA and Mahindra and ended up thinking on the same lines.

The Indian car buyer can aptly be defined as the one who is always on the lookout for a VFM deal, be it in any segment. Car manufacturers initially banked upon the hatchback segment which now is so crowded that no matter what car you buy be it Alto or i20, an average Indian will end up saying "choti car" (small car). This thought process or rather ignorance and VFM inclination made the manufacturers enter the sub 10 Lakh SUV category, where SUV wannabes (no offences to anyone, this is just me) are now having a field day. And as 2014 unfolds all of us are aware of proposed launches by Suzuki and Honda in this category.

I am of the opinion, that this segment will again go the hatchback way and in the coming couple of years with increased competition / rising input costs manufacturers would want to differentiate themselves. Why I say this is because for a lot of potential buyers that I know personally have ruled out purchasing an Ecosport or a Duster which were VFMs when initially launched. I believe that manufacturers will be able to do just this much to justify price increases / competition in the existing products. This will lead them to develop the 13-18 Lakh SUV category with new products, bombarding potential buyers with "real SUV" marketing taglines and positioning.

Having said that, I dont mind both the Indian manufacturers ruling this segment :-).

OT: As a potential SUV buyer, one day I saw a Storme, Scorpio and an Ecosport all three in parallel in that order waiting at a traffic signal on Mathura Road, Delhi. Needless to say which "Beast" ruled the pack.
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Old 4th February 2014, 14:59   #6
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Default re: The great Indian SUV void in the Rs. 15 lakh space

I can really relate to the OP on this subject.

I was having a look in the 10-16L market for SUVs a few months ago and I found the Mahindra XUV 500 to be really attractive to me overall but the harsh interiors plus uncertain reliability for the electrical even after the '2.0 XUV' kept me away from it. The lack of viable options in this particular market for SUVs is indeed very disheartening, Would pick a quality SUV any day over the Octavias.

I do hope other manufacturers will come in with offerings soon. I think the initial success of the XUV should be proof enough that Indians love SUVs especially in this price range. The sales only slid for the XUV after bad word of mouth due to above mentioned issues didn't it. So one can't say that the market doesn't exist in my opinion.
If a manufacturer can come in ticking the right boxes a 10-15L SUV should sell like hot cakes!
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Old 4th February 2014, 15:04   #7
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Default re: The great Indian SUV void in the Rs. 15 lakh space

In an ideal world, the Skoda Yeti and the Tata Aria would have been the perfect vehicles in this category.

Both of them are high enough. While one is pretty compact for small families, the other is battleship sized for the big and brawny ones. Both of them are fully loaded and drive very well. Much more nicely than the other vehicles in this segment.

However, neither of them figures in the list of prospective buyers. And even when they do, dismal sales numbers, maintenance reliability and resale concerns and the legendary ASS perceptions of both Tata and Skoda scare people away.

This is an opportunity for the respective companies to set the record straight, as these are super competent products that have failed miserably. The facelifts of both cars are being launched at the Expo 14. Coincidence? Perhaps.. Perhaps not..

Last edited by Shreyans_Jain : 4th February 2014 at 15:20.
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Old 4th February 2014, 16:13   #8
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Default re: The great Indian SUV void in the Rs. 15 lakh space

A topic that had been bugging me as well as I'm in the market for such a vehicle. Obviously I'm not an authority on automobiles, but my feeling is that the following vehicles could be managed to be sold with localised components, at ~15-18L on-road.

Toyota Rav4
Skoda Yeti
Nissan Qashqai
Renault Captur
Ford Escape
Nissan Juke
Mazda CX-5
Hyundai iX 35

Last edited by k_ajay : 4th February 2014 at 16:14.
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Old 4th February 2014, 17:13   #9
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Default re: The great Indian SUV void in the Rs. 15 lakh space

You have hit the nail right on the head Tanveer, there is so much scope in the 10 to 20 lakh bracket, that it is not even fair. Yet none of the big international brands want to even consider that this space exists. XUV sales slowed down due to problems with quality but if the initial euphoria was to be believed, there is a hell of a lot of traction in this space.

If one sees, for most of the sales in India, it is either sub 10 or greater than 20. Barring a few examples most cars don't sell in the middle bracket. I wonder why that is?
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Old 4th February 2014, 17:42   #10
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Default re: The great Indian SUV void in the Rs. 15 lakh space

As Girish said, its herd mentality.
  • Hatchbacks sell. So everybody and their dog wants to introduce a new hatchback.
  • Hmm Sub 4 meters sedans are the new attach. Quick lets all attach boots to our hatches, aesthetics be damned
  • Compact SUV Compact SUV..... Lets all make compact SUVs
  • Executive sedans Executive C+ segment ... Quick get on the bandwagon
  • .....
So this is how it goes, one thing sells, and then everybody jumps on that to milk it dry. The lower the entry barrier, the better it is. Fortuner showed that 20+ SUVs can be a hot selling item, so now, everybody wants to make a 20L+ SUV due to margins profit. But the sad part is, most of them flopped.


I guess, till the tiny SUV craze dies out, nobody is going to look at this segment.
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Old 4th February 2014, 17:56   #11
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Default re: The great Indian SUV void in the Rs. 15 lakh space

When I was in the market for SUV back in 2007, there were at least 3 contenders in this segment. They were Grand Vitara (14L), Endeavour (17L) & Tucson (16L). Now GV and Endy are in early 20L and Tucson is no more. If I have to replace GV in another 5 years, I need a reliable SUV in this segment from a reliable company.

If not, I'll be looking into pre-owned market.

Last edited by Samurai : 4th February 2014 at 17:58.
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Old 4th February 2014, 18:34   #12
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Default re: The great Indian SUV void in the Rs. 15 lakh space

Here are a few questions I would consider:

1. Is the market segment big enough? (current buyer segment, potential buyer segment)? Is the growth attractive enough? What % of 13-16L auto buyers would go for SUVs?
2. How much fresh demand would I be creating with better/new offerings? How much market share would I need take from existing players? How would they potentially respond?
3. What kind of investment do I need to make to capture the opportunity? Will the production model be economical? What kind of value chain should I use? CKD? Manufacture here? What about current plan capacity and production synergy?

No company has infinite resources. If the investment makes sense - from a financial return perspective, or from a tactical perspective (e.g. filling up a product line gap), then auto companies would act.

I would think that for a foreign entrant, project IRR (internal rate of return) would be better for creating more capacity/differentiation below 13L segment, given the youth heavy upwardly mobile Indian population. Or to launch premium offerings from their worldwide portfolio.

Moreover, it is easier to come down (from a brand positioning perspective) than move up - leaders such as Maruti have realized that.

If there were many more options in the 13-16L segment, would demand significantly go up? Why is it that only domestic players are catering to this segment currently? Perhaps the foreign players have more attractive segments to target at present?

Anyway, the decisions would ultimately need to be data (cost/ benefit, investment/returns) driven, supported by rigorous demographic and psychographic research and analysis.

Last edited by nilanjanray : 4th February 2014 at 18:38.
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Old 4th February 2014, 20:00   #13
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Default re: The great Indian SUV void in the Rs. 15 lakh space

Quote:
Originally Posted by nilanjanray View Post
Anyway, the decisions would ultimately need to be data (cost/ benefit, investment/returns) driven, supported by rigorous demographic and psychographic research and analysis.
You are right, but lets not forget that companies often brand cross-platform systems and scale distributed synergies to create cutting edge product portfolios.
The internet e-enables the manufacturers morph revolutionary markets through architecting granular convergence and real time feedback.
But is there the will to reinvent collaborative ROI and drive bleeding-edge solutions to cater to this segment. Its totally missing.
Unless you revolutionize compelling paradigms, there is no way to facilitate revolutionary deliverables, which in this case, is this segment
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Old 4th February 2014, 21:54   #14
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Default re: The great Indian SUV void in the Rs. 15 lakh space

Quote:
Originally Posted by tsk1979 View Post
You are right, but lets not forget that companies often brand cross-platform systems and scale distributed synergies to create cutting edge product portfolios.
The internet e-enables the manufacturers morph revolutionary markets through architecting granular convergence and real time feedback.
But is there the will to reinvent collaborative ROI and drive bleeding-edge solutions to cater to this segment. Its totally missing.
Unless you revolutionize compelling paradigms, there is no way to facilitate revolutionary deliverables, which in this case, is this segment
Vow!! sorry to be off-topic. But your post sounds as complex as Jairam Rameshesque.
I think a Rs 15 L reliable SUV would be very successful, given, how per capita incomes are rising. The void could be filled in a day, if the government starts to do away with draconian customs duty on CKD/ CBU imports. Primarily, its the government not manufacturers who is responsible for this void.
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Old 4th February 2014, 22:14   #15
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One product that would perfectly fit the bill is Honda Vezel. But will Honda bring this to India?
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