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Old 1st March 2020, 00:42   #1
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Default Risky car manufacturers in India, considering their sales numbers

It is no secret that the automobile industry in India is going through a tough phase. In India, with over 95% of the sales coming from only 8 manufacturers, is it safe to buy cars from other manufacturers ?

Some manufacturers (like Fiat & previously GM) had some of the best cars but because of low sales volume, they didn't find the Indian market viable to sell cars further. The major disadvantage for car buyers from those manufacturers is that after a year or two, they find it hard to procure the spare parts & even if they do, it gets expensive. The lack of support structure from the company will further increase the pain when the car gets into any problems.

As the sales numbers keep falling, many dealers have shut their outlets as the business turned unviable. Recently , we heard Ford clarified that they are not abandoning the Indian market but having a JV with Mahindra. This is at least a minimal assurance to future Ford buyers that they have a place to service their cars. Nissan is following GM's path, any day they can pull out of the market. Mitsubishi is almost a dead brand. VW sales just doesn't justify their brand name. Same with Jeep who are selling less than 1000 units a month. Datsun is almost following the Nano death. Probably the major reason why Maruti is the market leader is because of their sales numbers. Buyers buy more from the product which sells more.

As automakers are adjusting their strategies to grow in this market, Which are the brands you would shy away from buying because of their sales numbers ?
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Old 2nd March 2020, 10:23   #2
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Default Re: Risky car manufacturers in India, considering their sales numbers

Rightly said. Take a look at the bottom of our sales chart. You simply can't survive on those kinds of numbers, unless you are selling high margin products (e.g. Skoda, Mercedes) or have supplementary businesses (e.g. FCA & its engine supplies). VW's dispatches in Feb 2020 dropped to a depressing 350 cars ...that's not enough to pay the bills. I know dealerships that move more metal.

Ford has been doing 5,000 - 6,000 / month, still decided to partially exit India and hand over the reins to Mahindra. MG India will be able to survive on low volumes as the Chinese parent (who is a giant) has cut them a blank cheque for 5 - 8 years.

Nissan is one sure-shot brand on ventilator support. If their next crossover doesn't click, I think it's time to remove the oxygen supply.

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Old 2nd March 2020, 11:54   #3
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Default Re: Risky car manufacturers in India, considering their sales numbers

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Originally Posted by GTO View Post
Ford has been doing 5,000 - 6,000 / month, still decided to partially exit India and hand over the reins to Mahindra. MG India will be able to survive on low volumes as the Chinese parent (who is a giant) has cut them a blank cheque for 5 - 8 years.

Nissan is one sure-shot brand on ventilator support. If their next crossover doesn't click, I think it's time to remove the oxygen supply.
But one cannot completely write off brands based on Domestic performance alone right ? Since many of them are also into Exports to other markets ?

Yes local dealerships will suffer the most, but i feel the Brands may still cover some amount of risk if their exports are on Target.
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Old 2nd March 2020, 14:32   #4
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Default Re: Risky car manufacturers in India, considering their sales numbers

It is very unlikely that a manufacturer with miniscule marketshare (within a sub-segment, not overall) has a product you want to buy. If their products were really desirable, value for money or practical, the manufacturer would not be a bottom feeder on that chart.

Also, a model from low sales manufacturer is unlikely to have too many engine & transmission options. Even if you like the model, you probably won't sign the cheque because of lack of options.

So this 'risky manufacturer' problem takes care of itself.
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Old 2nd March 2020, 19:28   #5
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Default Re: Risky car manufacturers in India, considering their sales numbers

In my view the profit margin on products also matters. For example company A sells 1000 cars but with a very high profit margin and is an expensive product and company B sells 10000 cars but with a low profit margin and is an cheap product they might be comparable in overall profit cut.
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Old 2nd March 2020, 20:29   #6
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Default Re: Risky car manufacturers in India, considering their sales numbers

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Originally Posted by SmartCat View Post
It is very unlikely that a manufacturer with minuscule market share (within a sub-segment, not overall) has a product you want to buy. If their products were really desirable, value for money or practical, the manufacturer would not be a bottom feeder on that chart.
Beg to disagree on the product desirability part.

The last time we compiled an enthusiast's car list in Team Bhp - below were the top five entrants.

'JTSV' Tiago JTP
'Skoda' Octavia vRS
'Fiat' Abarth Punto
'Ford' Figo S
'Volkswagen' Polo GT

Every single one a 'risky' proposition.

Hence it is very much likely that a manufacturer with a minuscule market share has a product you want to buy - because they are desperately looking for niche segments to sell some products and also to establish their brand name in one way or the other.

But, as a market, we generally tend to buy into a company (For better sales, better after-sales, known reliability etc) than a more desirable product. The established players don't care about desirability - because, for every one enthusiast, 99 others are consuming their products in the mass market!

Last edited by CrAzY dRiVeR : 2nd March 2020 at 20:32.
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Old 2nd March 2020, 21:11   #7
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Default Re: Risky car manufacturers in India, considering their sales numbers

I know it's not a mainstream car brand, but, the way Audi has been going on about their business is very risky. They have gone from being the leaders of the luxury space not too long ago to falling behind JLR. They need to have a serious rethink of their product lineup and pricing if they want to recover their lost market share.
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Old 2nd March 2020, 22:23   #8
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Default Re: Risky car manufacturers in India, considering their sales numbers

With MSIL exiting Diesel from April 1st, the game could change in the next qtr or two, the charts might look quite different. Who could be the major beneficiaries? I think VW group seems like one to make some gains apart from HMIL and TML.


As an example, how many folks will buy Vitara brezza 1.5 Petrol?
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Old 2nd March 2020, 23:26   #9
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Default Re: Risky car manufacturers in India, considering their sales numbers

Quote:
Originally Posted by SmartCat View Post
It is very unlikely that a manufacturer with miniscule marketshare (within a sub-segment, not overall) has a product you want to buy. If their products were really desirable, value for money or practical, the manufacturer would not be a bottom feeder on that chart.

Also, a model from low sales manufacturer is unlikely to have too many engine & transmission options. Even if you like the model, you probably won't sign the cheque because of lack of options.

So this 'risky manufacturer' problem takes care of itself.
Counter - Honda Jazz. Excellent car, safe (as opposed to Baleno), good driving dynamics (as opposed to i20) and offers a segment only feature if you're looking for automatics - paddle shifters.

Except being value for money, Honda Jazz ticks every box and yet, it's not selling at numbers which could inspire even a little confidence in a prospective buyer. It sold 46 units in January. Had it been selling close to even 1k mark, I'd buy one eyes closed. It's such a capable and good car, but it's the sales which are absolutely shocking for such a car. I can't, for the life of me, understand why it's so unpopular. Hondas also tend to be reliable, unlike the germans.
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Old 2nd March 2020, 23:40   #10
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Default Re: Risky car manufacturers in India, considering their sales numbers

It is about demand and supply, there may not be much demand for a product from these brands that are about to go belly up and die. This by the way is their own making, laziness among many other sins.

The leading brands have invested in this country, put in the effort to know what we want and sell what they make and then double down the commitment with good after sales support.

We do not want cars sold today that looks the same as the ones they made 10 years back, we do not want sticker jobs of failed products. We like to know that the vehicle gets looked after properly and that a hatchback costs as much as a hatchback to maintain, no more.
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Old 3rd March 2020, 01:08   #11
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Default Re: Risky car manufacturers in India, considering their sales numbers

I don't agree that there is one simple major reason for people to buy Maruti cars because of its high sales numbers. Wagon R, for example, has been an excellent product, trouble free, easy and cheap to maintain, high mileage and good resale value among other factors. Buying a Maruti, an average person need not get into becoming a car expert, which majority of Indians are not. Maruti offers excellent products which results into a good car buying decision and experience for the average person. Marutis can even be modified tastefully or dis-tatstefully as per the limitations of ones pocket.

Indians, as a whole, are basically 'cheap' (as Russell Peters would put it). We generally like 'cheap' things and that usually applies to car buying too, IMO.

To answer, I would definitely shy away from Hyundai/Kia/MG/Chevrolet/Force/Tata/Mahindra.

Would definitely not shy away from Fiat/Ford/VW/Skoda/Mitsubishi/Honda/Toyota/Suzuki.

Last edited by Fuldagap : 3rd March 2020 at 01:09. Reason: Grammar and spelling edit
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Old 3rd March 2020, 01:15   #12
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Default Re: Risky car manufacturers in India, considering their sales numbers

The problem with the market is some customers are risk averse (rightly so) as cars are a big ticket item for many Indians. In the same breath, I must add that exceptional cars from unknown brands have been accepted.
Examples:
1. Hyundai Santro
2. Toyota Qualis
3. Renault Duster

As a customer, I don't like brands which are not proactive. Where is the new gen Renault Duster or Nissan Micra? Duster launched before the Creta and Renault is selling the same car. 2nd gen Creta is round the corner.
Quote:
Originally Posted by RaghavEvoX View Post
Which are the brands you would shy away from buying because of their sales numbers ?
My parents are buying a small city runabout in Bangalore. I've asked them to stick with Maruti, Hyundai, Honda or Toyota only.
Quote:
Originally Posted by Mi10 View Post
But one cannot completely write off brands based on Domestic performance alone right ? Since many of them are also into Exports to other markets ?
The route to Europe from Turkey is much shorter than the route from India. The route to US from Mexico/Japan/SE Asia is shorter. The route to Australia from SE Asia is shorter.

If the domestic volumes aren't healthy, it is difficult to justify manufacturing in India. Companies have to import parts, assemble the cars and then export thousands of miles.

Last edited by landcruiser123 : 3rd March 2020 at 01:17.
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Old 3rd March 2020, 01:16   #13
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Default Re: Risky car manufacturers in India, considering their sales numbers

Quote:
Originally Posted by RaghavEvoX View Post
Which are the brands you would shy away from buying because of their sales numbers ?
As of now, I will only stay away from Nissan & Datsun.

Rest of the manufacturers with low sales seems to be safe at-least for the next 5 years.

Skoda, VW, MG and Jeep needs to come up with some new models to sustain in India.

Toyota is practically surviving on two car's from their own stable, but wait they have Maruti inside! What a master stroke! Why choose the harder path, when you have a shortcut, easy way out!
Why bring the Yaris hatch or the Rush, let's sell Baleno and Brezza with different names!
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Old 3rd March 2020, 04:37   #14
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Quote:
Originally Posted by CrAzY dRiVeR View Post
Beg to disagree on the product desirability part.

The last time we compiled an enthusiast's car list in Team Bhp - below were the top five entrants.

'JTSV' Tiago JTP
'Skoda' Octavia vRS
'Fiat' Abarth Punto
'Ford' Figo S
'Volkswagen' Polo GT
I beg to differ here - an enthusiast interest isn't the right measure to conclude desirability of a product in the market place it competes in.

Quote:
Originally Posted by landcruiser123 View Post
The route to Europe from Turkey is much shorter than the route from India. The route to US from Mexico/Japan/SE Asia is shorter. The route to Australia from SE Asia is shorter.

.
Too simplistic here's why.

1. Cost of labor
2. Cost of raw materials and parts
3. Political stability (You think Turkey is politically more stable than India is? )
4. Favorable or unfavorable tax policies

If distance was the only key factor, then China would not had emerged as the manufacturing Juggernaut for all small and big price sensitive items under the sun.

Last edited by Chetan_Rao : 3rd March 2020 at 09:51. Reason: Merged back to back posts. Trimmed quotes.
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Old 3rd March 2020, 10:23   #15
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Default Re: Risky car manufacturers in India, considering their sales numbers

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Originally Posted by Fuldagap View Post

Indians, as a whole, are basically 'cheap' (as Russell Peters would put it). We generally like 'cheap' things and that usually applies to car buying too, IMO.
Doesn't make sense at least in the current scenario. If this was the case , Nano wouldn't have bombed and Creta wouldn't have been selling like hot cakes all these years. I would prefer calling Indians 'Safe buyers' who like fuss-free ownership experience & long-term reliability.
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