[Omkar]

Of the 15 car manufacturing companies in India, eight have a market share of below 2 per cent, raising questions about their long-term future in a competitive market that has already seen Ford Motors and General Motors slam the door on India. The eight are Honda, Nissan, Renault, MG Motors, Volkswagen, and Skoda brands (calculated separately), Isuzu, FCA India (which sells the Jeep), and PCA Motors, the Indian unit of Stellantis that launched the Citroen C5 Aircross.

I don't think, based on the strengths of the players, that there will be more than seven or eight players in India in the next three to four years

- said B V R Subbu, Automotive industry expert and former Hyundai India president .

In 2009, Volkswagen, the number one car maker in the world, announced it was aiming at an 8 to 10 per cent share of the domestic market. Earlier this year, Piyush Arora, managing director Skoda, Volkswagen India, told the media that the company was looking at heading for only a 5 per cent market share in 2025.

In 2010, Honda said it would be looking for a 10 per cent market share in India that year. In 2018, the then managing director of Honda in India, Yoichiro Ueno, reiterated the same target. During the April-October 2023 period, Honda's share is a mere 1.9 per cent. Putting a brave face on it, Takuya Tsumuru, president and CEO of Honda in India, said the company was not looking to exit because it was here for the long term.

Nissan India also had a clear plan for India. Its operations president, Guillaume Sicard, told the media that it wanted to hit a 5 per cent market share by 2020. Its current market share for April-October 2023 is 0.69 per cent with only 17,223 vehicles sold. Like Honda, it has said it will remain invested in India in collaboration with Renault and will put in $600 million in FY24. Meanwhile, Renault has sold 1 million vehicles to date and wants to double this by 2030 even though it sold only 28,868 vehicles in April-October.

Many carmakers faced with the failure of their earlier targets for market share have shifted strategy by focusing on exports from India. One example is Volkswagen (excluding Skoda) whose domestic sales and exports are almost 50-50 (around 25,000). In April-October, the Volkswagen group accounted for a reasonable 6.5 per cent of all car exports from the country.

Nissan and Renault also sell much more in the export market than they do in India. The two exported 34,224 vehicles in April-September, accounting for 8.7 per cent of total exports. In the same period, their collective share of the domestic market was only 1.85 per cent.

Source - Rediff

[V.Narayan]

I would look at it differently - 6 car makers including two home grown ones have cracked the code of being successful in one of the largest and toughest growing markets in the world. Kudos to these six - Suzuki, Hyundai, M&M, Tata, Toyota, Kia. Clearly they learnt something the other 8 did not.

Let's dissect the 'Other 8'. Force is barely into cars their forte is really small commercial and utility vehicles and their so called car sales do not determine their fortunes - so let's take them out. MG Motors are facing political headwinds after a great start so we must wait and watch how things pan out. The reminder 6 in my opinion have only themselves to blame for their poor showing. If the VW group have a 2.1% market share after about 2 decades then I don't see a reason to pity them. They are the 800 pound gorilla in the room who know how to manage Governments and manipulate laws and still.....!!!!!

The tone of the boxed comments in the opening post hint as if the car makers are the poor child who needs help and must be helped by the Govt. Can't agree with that tone. These are big boys, the play the world over, they are where they are in India due to a weak product range and often poor ASS in a highly service and price sensitive market.

India's worth as a destination must also factor in exports of VW, Hyundai Group, Nissan Group etc. That is what ultimately shows up on their India balance sheet.

[shankar.balan]

Originally Posted by V.Narayan

I These are big boys, the play the world over, they are where they are in India due to a weak product range and often poor ASS in a highly service and price sensitive market.

It may not make sense for VW Group or frankly even Toyota to bring in any of their smaller / mass-market cars in a bid to remain competitive and gain market share. Example: VW Up! and Toyota Aygo. The takers for these will be few and far between and the sales numbers won’t justify the effort and monetary cost in this country at least.

Even their small cars will be more expensive when compared to an equivalent segment/ size offering from the Korean, Japanese competitors.

This fact is borne out by the badge engineered Maruti-Suzuki-Toyota vehicles which are breezily sold in India. Toyota is simply unable to make and sell their smaller mass-segment vehicles profitably in India.

Consider also Ford in the US. It is happily selling its big expensive trucks and pickups and SUV’s but not at much bothered about its car portfolio because they aren’t generating as much sales and/ or margins as their Trucks and Pickups are.

As an aside, how dearly I wish that Mercedes would bring its Smart brand into India. But such an entrance will be quite untenable for them, except possibly as some sort of ‘Halo’ Luxe Sub Compact. And the volumes will never really build.

What is considered a common man’s mass-market vehicle in other parts of the world, seem to become a part of the aspirational, prestige, luxe segment in India.

I agree that we are a highly service heavy and price sensitive market. It is in our basic DNA to demand much more for much less and it may not be possible for many of these brands to service this kind of demand.

(It is also a bitter fact that our tax structures are plainly usurious.)

I worry that Jeep-FCA-Stellantis is going to be the next casualty.

[sarathlal]

Originally Posted by V.Narayan

....

The reminder 6 in my opinion have only themselves to blame for their poor showing. If the VW group have a 2.1% market share after about 2 decades then I don't see a reason to pity them. They are the 800 pound gorilla in the room who know how to manage Governments and manipulate laws and still.....!!!!!

Can't agree more.
Honda for instance, have only their Indian management to blame. There was soo much brand value, so much aspiration for this brand and still they managed to lose it out.

Nissan also does not have to look outside their office to blame. With such wide vehicle portfolio, they treated this market like trash

[rsidd]

Originally Posted by shankar.balan

I agree that we are a highly service heavy and price sensitive market.

Yes and no. No, because the best sellers are SUVs and not Alto-type cars now. Tata's best sellers, by some distance, are Nexon and Punch. For Hyundai it's Creta and Venue. Mahindra and KIA are exclusively SUV (except for Kia's EV6 which is marginal). These are pricey by Indian purchasing power standards. Only Maruti is having success selling non-SUV hatches (Wagon-R, Swift, Baleno, and, some distance behind, Alto.)

Yes, because a Nexon or XUV700 costs much less here than a similar car would in Europe. They do have to figure out how to adjust both their prices and their specs to match Indian offerings from Maruti, Hyundai, Tata, Mahindra. Kia has figured that out. Renault had (with the Duster) but has lost its way. Citroën, Jeep, and others haven't.

[SmartCat]

I agree with the first half of the statement - "more car companies will exit India". But not with the second half where he says "only 7 to 8 will survive".

Meaning, exits will be replaced by new entrants. As the market matures, we can even expect old hands to come back again and give it a shot for the second time (5th time in case of Fiat)

One problem with manufacturers is too much focus on marketshare. With outlandish and grand plans of gaining 10% marketshare, their investment and cost structure goes overboard. Honda/Toyota/Mercedes/BMW etc have proven that you can have a profitable business with small marketshare, by just keeping a lid on expenditure & investments.

https://www.team-bhp.com/forum/india...-up-521-a.html (Honda Cars India records profit of Rs. 1,430 crore in FY23 | Up by 521%)

[Raghu M]

I am actually happy looking at this article. If anything, the local companies are rocking and so are the Koreans. I don't see the argument that the market has to be flooded with models and customers have to be spoilt for choice. If you can crack the market, you stay. It's a simple law of nature. This may sound a little harsh but I don't think VW, Skoda and companies like Ford, Jeep and MG are even trying anything new here of late. They don't have a line up to begin with and have looked at India as a secondary market.

If anyone argues that the govt. is not doing enough, it would be an exaggeration. They can manipulate the entire EU, US and other regions (remember diesel gate?) but can't penetrate into a market like India? Come on. After Ford's exit, these companies should have woken up and realized that they have to do something they have never attempted in any other markets. The theory that India doesn't deserve great cars is pure nonsense. Creata, Harrier and the 7OO are selling in thousands, they are not cheap cars.

[Hayek]

Agree fully with @smartcat - you don’t have to have a large business in a market like India to be profitable.

The auto industry in India and globally will witness more change in the next decade than it has in the last 3 (for India) or in the last 5 (for the rest of the world). Which technology wins and how players adapt to the new paradigm is far more important for future value creation than the current market share of any player.

So we will see different strategies - the dominance of Maruti and Toyota could be challenged by groups like Tata, Mahindra, Hyundai, Kia and perhaps even some Chinese players if they adapt to EVs while the incumbents double down on hybrids. The Germans in any case need to master electrification and software, while maintaining their edge on fit and finish.

And players without a strong moat at home or otherwise like Renault, Nissan, Stellantis could follow Ford and GM home - or re-emerge in some new combination that succeeds.

Other strategies are also possible - if green hydrogen takes off, those who adopt that technology may be the ones who win. And never count out the ability of Maruti and Toyota to turn into fast followers who wait and watch and then beat the inventor of a new technology at their own game.

All in all, interesting times ahead.

[anjan_c2007]

Like many others I too do not agree with the statement of BVRS an auto industry veteran, when he says that we shall have more than half a dozen carmaker exits. These on the BVRS list are regulars in the monthly three, four or low figure sales, Laggards Club. But other than some new shocking entries to this Laggards Club, the others are oldies who are carefree and ensconced here since a decade or more. And yes, Renault and Nissan have a good export base from here and they're doing well as the OP illustrates. And those Fiat 2.0 L diesels power Tata, MG and those Jeep SUV's. So even if FCA's fully built units sell just a hundred or more a month, the Fiat engines are in demand. Its like someone whose no more (FCA cars), donating his or her organs (read diesel engine) to a donee or recipient to rock on.

Till now, only Western brands have exited so its likely that one or two Western Brands from the Laggards Club could follow suit. But none of the brands from the Far East have closed shop in India. VW and Skoda with the mixed success of their mini-SUV's are testing our waters for survival. For Daewoo Motors the shutting shop was for an unavoidable reason. And as for Mitsubishi an old pop song "now you see me, now you don't" applies.

BVRS like Maruti's Bhargava is a veteran from our auto industry. But whereas Mr Bhargava is still in touch, BVRS has completed 17 years since he relinquished office.

[jinojohnt]

Is the market share calculated in terms of the number of cars sold or in Rupee terms? If it's the former, the data may be skewed (an 'ailing' company may not be a mass market producer, and turnover/profit may be healthy).

[am1m]

So. What. That's what my instinctive reaction is. Companies like Honda have consistently ignored what the Indian market wants and think we'll buy whatever they think we want. Ford slid from a position of strength. And Skoda, well, the forum is full of posts about service horror stories. Current owners of old models will naturally worry about service, but overall, I really don't see why we should worry if/when they exit. When did multi-billion dollar auto companies become deserving of sympathy, that too for their mistakes?! If they go, others will come in their place.

[Guna]

Correct way to analyse is to look at the market share they have in the segment they are operating at. Most of these manufacturers who are at the bottom 2%, don't sell economy hatchbacks. MG Sells only SUVs and EVs and they are doing well in those segments.

[naikameya]

Originally Posted by V.Narayan

The tone of the boxed comments in the opening post hint as if the car makers are the poor child who needs help and must be helped by the Govt.

India's worth as a destination must also factor in exports of VW, Hyundai Group, Nissan Group etc. That is what ultimately shows up on their India balance sheet.

The article is probably motivated or foolishly written, at least from the boxed comments. It royally ignores these companies' balance sheets and profits from their exports and other sales.

Even if we think these companies suffered due to some laws and policies, others entered simultaneously or later and are thriving. Also, let's not forget some of these companies were initially successful (Honda Skoda MG) and respected, but some shot themselves in the foot.

[Satkaj]

No car company or their board room would be able to ignore India. Each of them will try to enter , learn make few mistakes and still try to remain relevant in their core segment.

I would wonder , where would Toyota stand if you take away numbers of Maruti’s re badged cars. Many such alterations will keep evolving in time to come. Out of few latest entries, Kia made a bold and smartest move believing in their products and marketing team and met with success. They literally went all out. Somehow, we never doubted their success. They always had small SUV’s in their portfolio and they introduced it from day one. VW on the other hand learned this and worked their strategy which certainly helped them to venture in to a mass Indian segment, though volume wise not to an extent of top 8 companies. Does that mean that VW is unhappy. They were always content with their India strategy. Toyota also was always content before they changed their India vison along with Maruti. These 2 are one of the biggest world car companies. May be profit was more important for them rather than unit sales.

India has already turned a huge market and with GDP growth expected for next few decades, these car companies will always have some share to contribute as long as they are able to see a profit. Even if it is minimal .

[Mr.Ogre]

I have said this else where and I will say it again here, this is not just India specific issue. The car makers that are struggling to crack the market here are struggling else where too.

Namely - Ford, GM, Honda, Skoda, VW, Renault etc.

They clearly aren't being managed in the right direction and it shows in most of the markets they are operating in.

GM (Holden) already quit Australia, Ford is one car away (Ranger) away from exiting Australia, Honda is struggling to get volumes and there are news that they are the next in line to exit Australia, Skoda isn't doing great and companies like Renault aren't selling in noticeable numbers.