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Old 28th November 2015, 14:54   #1
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Default India's entry-level segment grows after 4 years of decline

India's entry level car market (Cars priced below 5 Lakh) has nudged into positive territory after nearly 4 years of decline. The entry car segment posted 0.29 per cent growth in the April-October period on the back of a strong launch by the Renault Kwid and the re positioning of the Nano which has led to better sales in the Metro cities. The Alto which has been kind of a lone ranger in this segment, now has a lot of company.

The entry level market had shrunk to a low of 26% of the overall market from a peak of 35% in FY 2012.

A decline in inflation and interest rates combined with lower fuel prices have buoyed sentiment as the cost of ownership has dropped, pushing many to take the plunge.

In the past few years, most of the new launches concentrated on the B and C Segments, there has been not much additions to the sub 5 Lakh segment. But this has started to change. Lot of changes has happened/is happening in this space recently:
  • The refreshed Alto K10 with AMT has attracted a lot of the urban buyers.
  • Tata's refresh of the Nano with the AMT and positioning it as a cooler urban commuter as opposed to the cheapest car has helped to some extent
  • The Kwid with its SUV kind of looks and USP's of space and price has managed to create a storm.
  • Tata is ready with the Zica (Discussion Link (The Tata Zica Hatchback (aka Kite)) and seems to be a looker.
  • Mahindra is readying the S101 (Discussion Link (Scoop Pic! Mahindra's S101 Mini-SUV spotted)) which although not strictly an Entry Level, is expected to be priced close to the top end variants of the Kwid.

While this is good news for the first time buyer and the industry in general. Need to see how our creaking urban infrastructure can handle a potential surge in the entry level volume. When the Nano was first launched, there was a talk of the roads being filled with Nano's. That did not happen. But with the climate again conducive for the first time buyer and several new options in line with the aspirations of the Indian car buyer lined up, would be interesting to see how this turns out. Remember, our ratio is 20-30 cars/1000 people, way behind China with 100/1000 and a long long way behind countries like Japan and US (800/1000).

Trivia: Hyundai Motor India, which recently discontinued its Santro at the entry level, has seen its mini-car volume decline more than 40 per cent in the past seven months. Sales and marketing head Rakesh Srivastava said this had been a conscious decision by the company to restructure its portfolio and make i10 and i10 Grand, which are positioned above the mini-car segment, more accessible to entry-level buyers.

Source: ETAuto

Last edited by Rajeevraj : 28th November 2015 at 14:56.
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