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Old 13th January 2022, 17:42   #1
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Default Key Takeaways for 2021 - An Analytical Perspective

The Year 2021 saw many upheavals in the form of both a deadly 2nd wave of Covid which virtually shut down the month of May as well as the serious shortage of computer chips that plays such a ubiquitous role in our lives in general and in the Team-BHP context, cars in particular!

Despite these two serious hurdles, the industry did very well for itself and many of the trends that we have been seeing in the past continued their march into this year as well. The industry is at the cusp of a complete makeover thanks to the EV revolution that has made such a brilliant comeback from over a century ago where their slow speeds and heavyweight gave way to the then far more efficient ICE engines mass-produced so well by Henry Ford.

Maruti continues to be the top seller but headwinds in the form of the great SUV revolution that cares for none, least of all the mighty, and the shift in demand to the more expensive price bands in general, have caused a serious fall of over 6% in market share for the giant. Though the aficionados and well-wishers speak of the slew of models Maruti is slated to launch in this year of 2022, and how this would bring back lost market share, we all have to wait eagerly to see how it works out and what the competition has up its sleeve.

Let us start with the top 10 models that sold in 2021. 8 go to Maruti, 1 to Hyundai, and 1 to Tata

Key Takeaways for 2021 - An Analytical Perspective-2021-top-10-models.png

Despite the stellar showing in the top 10 models list, Marutiís market share has fallen by almost 6%, thanks to an increase in Tataís share by almost 4%. In December thanks to the better management of chips by the Tatas as compared to Hyundai, they were number 2!

Key Takeaways for 2021 - An Analytical Perspective-2021-market-shares.png

Currently market share wise, the Tatas are around 5-6% short of Hyundai and if their current growth in numbers continues, it will be a matter of another 3-5 years when they make that a permanent storyline for some time to come

Honorable mention - Tata Motors
Tatas almost doubled sales in the past year. Commendable growth

Key Takeaways for 2021 - An Analytical Perspective-2021-tata-progress.png

Price Band Analysis
The percentage of cars sold under 10 lakhs is approximately 53% today and is slated to go below the 50% mark this year in 2022. They were over 80% in 2011!

Key Takeaways for 2021 - An Analytical Perspective-2021-price-band-analysis.png
The number at the top for each segment in a year is the market share of the segment and the second number is the cumulative annual growth rate or CAGR over 5 years.

Body Type Analysis
SUVs are now the No 1 segment of cars sold in India today. They are now at 40% compared to hatchbacks at 36%
Almost half of all SUVs sold are in the 4-meter segment comprising the likes of the Vitara Brezza, Venue, Sonet, and Nexon. 1 in 5 cars sold is a 4-meter SUV across all groups!

Key Takeaways for 2021 - An Analytical Perspective-2021-body-type-analysis.png
The number at the top for each segment in a year is the market share of the segment and the second number is the cumulative annual growth rate or CAGR over 5 years.

SUV Rankings


Key Takeaways for 2021 - An Analytical Perspective-2021-suv-ranking.png

1. Hyundai beats Maruti to the top spot
2. Tata moves to No 3 from No 5
3. Maruti and Kia both drop by 1 rank
4. Tata moves up 2 places
5. Nissan moves up by 3 ranks from 12 to 9, thanks to the brilliant Magnite
6. Mahindra moves down continuously and is at No 5. We hope to see dramatic improvements this year with their awesome launches

SUV sales over the decade
The below is a chart of just the SUV sales across segments. The growth this year has been an amazing 56% despite all the bugbears the industry is facing due to the chip shortage.

Key Takeaways for 2021 - An Analytical Perspective-2021-suv-sales-over-decade.png

Overall PV Sales are back above the 3 million mark after 2018 growing by 27% over the previous year
Key Takeaways for 2021 - An Analytical Perspective-2021-overall-sales-over-decade.png
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Old 13th January 2022, 18:51   #2
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Default Re: Key Takeaways for 2021 - An Analytical Perspective

Awesome Data. I was particularly taken aback by the percentage of cars below 10L.

Adding my 2 cents to this
Key Takeaways for 2021 - An Analytical Perspective-screenshot-20220113-6.41.53-pm.png

Compounding the Inflation rate since 2011

10 Lakhs would have compunded to around 18.5Lakhs today (Pardon me if my observation or math is wrong. I was only compounding the values from the graph)

It actually rose so much until 2013 (14+L in just 3 years, and then stabilized)

This actually intrigues me about how manufacturers could manage to sell their flagship cars for almost the same price for all these years.

Alto at 3.5L in 2011 is not sold for 6L today.
Polo of 8L in 2011 is still sold under 10L today.
Swift of 5.5L in 2011 is still sold under 8L today.

How did these companies manage? Inferior quality? Better Manufacturing processes? Localization? Extremely low margins?

Consider the newer launches.
A Honda City of 10L is 18L today, well in terms with the Inflation rates.
Similarly all the other newer launches like the Sonet, Creta fall well into this (16-22L price bracket), which is the 8-12L price bracket from 2011.
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Old 13th January 2022, 21:30   #3
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Default Re: Key Takeaways for 2021 - An Analytical Perspective

Quote:
Originally Posted by vinya_jag View Post
Awesome Data. I was particularly taken aback by the percentage of cars below 10L.

Adding my 2 cents to this
Attachment 2259469

Compounding the Inflation rate since 2011

10 Lakhs would have compunded to around 18.5Lakhs today (Pardon me if my observation or math is wrong. I was only compounding the values from the graph)

It actually rose so much until 2013 (14+L in just 3 years, and then stabilized)

This actually intrigues me about how manufacturers could manage to sell their flagship cars for almost the same price for all these years.

Alto at 3.5L in 2011 is not sold for 6L today.
Polo of 8L in 2011 is still sold under 10L today.
Swift of 5.5L in 2011 is still sold under 8L today.

How did these companies manage? Inferior quality? Better Manufacturing processes? Localization? Extremely low margins?

Consider the newer launches.
A Honda City of 10L is 18L today, well in terms with the Inflation rates.
Similarly all the other newer launches like the Sonet, Creta fall well into this (16-22L price bracket), which is the 8-12L price bracket from 2011.
Brilliant question. Much of this is related to market forces where competitive pressures don't allow you to keep increasing prices and also the fact that larger numbers make it cheaper to manufacture. The price you are quoted by a steel producer for a million tons and say 3 million tons is very different. At the same time the price also includes the development costs of a car which are very high. So the reason why VW could still be making money by selling a Polo at less than inflation costs 10 years after is because the development costs incurred more than a decade ago have been completely written off. One of the reasons why companies that sell larger number of cars can afford to change the model and give it a complete platform and face change every 5 years is because their volumes are huge, profits made are huge too, and this pays for the next round of investments. Brands like VW Skoda Renault etc have peddled old platforms and cars for a decade or more despite having next gen cars in their international portfolios is because they are not able to justify such investments in a market where they don't sell much. Hope I have made sense!
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Old 14th January 2022, 11:31   #4
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Default Re: Key Takeaways for 2021 - An Analytical Perspective

Dear Admin, when I click on the link provided in homepage for this article, it takes me to the Forum's page where I have to search for this article. Please see if the link provided in homepage is correct. Note that all other articles from homepage work fine. Also, please delete this message of mine.
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Old 14th January 2022, 13:02   #5
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Default Re: Key Takeaways for 2021 - An Analytical Perspective

Quote:
Originally Posted by vinya_jag View Post


How did these companies manage? Inferior quality? Better Manufacturing processes? Localization? Extremely low margins?

Consider the newer launches.
A Honda City of 10L is 18L today, well in terms with the Inflation rates.
Similarly all the other newer launches like the Sonet, Creta fall well into this (16-22L price bracket), which is the 8-12L price bracket from 2011.
Quote:
Originally Posted by niranjanprabhu View Post
Brilliant question. Much of this is related to market forces where competitive pressures don't allow you to keep increasing prices and also the fact that larger numbers make it cheaper to manufacture. The price you are quoted by a steel producer for a million tons and say 3 million tons is very different. At the same time the price also includes the development costs of a car which are very high. So the reason why VW could still be making money by selling a Polo at less than inflation costs 10 years after is because the development costs incurred more than a decade ago have been completely written off. One of the reasons why companies that sell larger number of cars can afford to change the model and give it a complete platform and face change every 5 years is because their volumes are huge, profits made are huge too, and this pays for the next round of investments. Brands like VW Skoda Renault etc have peddled old platforms and cars for a decade or more despite having next gen cars in their international portfolios is because they are not able to justify such investments in a market where they don't sell much. Hope I have made sense!
There are essentially 2 components to the cost. Fix cost and variable cost. As Niranjan mentioned the fix cost mainly the platform and machinery is written off and no longer affects the pricing drastically.

Most OEM have multiple vendor multi year strategy. They have global supply chain which can optimise cost and guard against massive fluctuations.

What hits them hard is currency fluctuation as this affects their import as well as profit reporting to the streets.

When the cars are priced they are done so keeping future inflation in ind so they donít have to keep increasing the pricing by large margin.

If you notice closely most of the expensive features have been removed from the car and replaced with gimmick features. For eg. multi link has been replaced with torsion beam, all disc with drums at rear, 6 airbag version in the top of the line variant, quality of panels have gone down, sharing of engines across as many models as possible to reduce cost across models.

Other key factors are competition and market involvement. Maruti and Hyundai are heavily invested in India and ensure they donít do crazy pricing.

Toyota, Honda and vag group now focus on profit with India being not so lucrative volume market for them. Their pricing reflects the same
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Old 14th January 2022, 19:40   #6
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Default Re: Key Takeaways for 2021 - An Analytical Perspective

Quote:
Originally Posted by NagaBond View Post
Dear Admin, when I click on the link provided in homepage for this article, it takes me to the Forum's page where I have to search for this article. Please see if the link provided in homepage is correct. Note that all other articles from homepage work fine. Also, please delete this message of mine.
It is fine now! Even I had this issue earlier but now it is good
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Old 14th January 2022, 20:34   #7
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Default Re: Key Takeaways for 2021 - An Analytical Perspective

The discussions around the cost reminded me of my early days as a production engineer in the Toyota Kirloskar Auto Parts (TKAP - which is a sister concern of Toyota Kirloskar Motors Limited (TKML)) where we manufactured propeller shaft, differential, front axle, rear axle and at a later stage - assembled gear boxes for the Toyota Qualis. Qualis was the first vehicle launched by Toyota in India with their re-entry in India in partnership with Kirloskar. The earlier partnership was with DCM.

Coming back to the topic of cost, what Toyota did was brilliant. They didn't start with a big bang, did not spend too much on product development, rather introduced an already popular vehicle "Toyota Kijang" renamed as Qualis. This vehicle was already popular in many countries - Philippines, Indonesia, Vietnam, South Africa and a few more.

Link here for those who are interested -> https://en.wikipedia.org/wiki/Toyota_Kijang

The production line for the simpler parts, like the propeller shaft - for instance was completely new consisting of machines manufactured locally in India. But, the more complex lines (for rear axle and differential) had age old (but robust) machines directly shipped via sea to the Indian factory! Since they were old machines, I am told the import duty was very low.

Zero cost on product development and research. Fortunately for Toyota, Qualis was loved by Indians. Link to a team-BHP thread on this -> https://www.team-bhp.com/forum/india...segment-2.html (Toyota Qualis Tribute | The vehicle that redefined India's MUV segment)

And I am guessing they raked in enough moolah to invest on Toyota Innova. In fact, Innova was launched in Indonesia first in 2004, and in India in 2005. Pricing of Innova is a completely different story!
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Old 14th January 2022, 21:29   #8
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Default Re: Key Takeaways for 2021 - An Analytical Perspective

Very fine analysis

Overall very good responses too.

One sore point to note for a ex mahindraite like me is, original SUV maker of the country "Mahindra ", is going down continuously for last 5 years as mentioned in posts.

It shows making vehicles liked by only enthusiasts is not enough to retain position. It should have mass market appeal also.

Hopefully New 700 & Scorpio will help them to regain their rightful place, albeit it sorts their mfg capacity issues.

Similar thing happened in EV field also for Mahindra.Pioneer in EV, is seen nowhere today

Hope they catch up in EV also.I am biased & waiting for them to launch a good EV which could be my next car.
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Old 15th January 2022, 16:18   #9
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Default Re: Key Takeaways for 2021 - An Analytical Perspective

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Originally Posted by Vijay T View Post
One sore point to note for a ex mahindraite like me is, original SUV maker of the country "Mahindra ", is going down continuously for last 5 years as mentioned in posts......It shows making vehicles liked by only enthusiasts is not enough to retain position. It should have mass market appeal also.....Hopefully New 700 & Scorpio will help them to regain their rightful place, albeit it sorts their mfg capacity issues.
It is the opposite for me. Ex-Tata fanboy, nah Tata anorak. I have jumped ship to Mahindra. For all their sales success, Tata doesn't seem to have core stuff sorted out and is on the brink of complacency. Mahindra, on the other hand have their core stuff sorted out. If not, for the chip shortage issue. They seem to have both the enthusiasts and fleet sales in their grasp.
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Old 15th January 2022, 19:36   #10
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Default Re: Key Takeaways for 2021 - An Analytical Perspective

^^^ Mahindra definitely seems well set to explode in coming 2-4 years. On a roll since October 2020 after launching Thar, then continuing it in 2021 with XUV700 I am sure this year won't be any different with new Scorpio - which in all probability will generate a lot of interest.
They are sticking to what they know and do best, the SUVs and it is clearly paying off. Thar 5 door will be an interesting vehicle to watch out for. On the engine front they are sorted too.
Tata on the other hand feels short on new cars barring the strange stretched Nexon and is definitely behind the engine development too, a big weak link.
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