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Car firms gear up for new launches to drive sales

November 18, 2008 02:27 IST

Car companies are hoping to buck the slowdown by launching new models to push sales from January. Industry majors like Maruti Suzuki, Mahindra & Mahindra, Hyundai India have all lined up launches in the next few weeks and months hoping to generate reasonable volumes.

Maruti Suzuki, the country's largest car maker with a market share of about 45 per cent, will launch the A Star model this month. Being the biggest volume player, the company is amongst the worst hit from the slump in demand with sales growth slowing to less than 3 per cent in April-October.

"A Star is a very significant launch for us because it is one of the strategic global models from Suzuki Motors. It will help us increase volumes," said Mayank Parekh, executive officer, marketing and sales, Maruti Suzuki India.

Analysts agree. "Although December will be a slow month, sales are expected to gather pace eventually," said S Ramanath, auto analyst, SSKI Securities.

He added that Maruti has lost market share in the compact segment with potential Zen Estilo buyers opting for Hyundai's i10. The company has lost an overall volume of 10,000 cars to competitors. "With the A Star coming in, the company should post additional sales of 4,000 to 5,000 units a month," Ramanath reckoned.

Similarly, the country's largest sports utility vehicle maker M&M, will be launching the Xylo (formerly Ingenio), a multi-purpose vehicle, in the second week of December. This will be the company's first new multi-purpose vehicle product offering after Scorpio.

"We are of the conscious view that there will be no benefits in postponing the launch of the Xylo any further. You are better off with a new product during this season," said Rajesh Jejurikar, chief of operations, M&M. "We hope to see improved liquidity around January which will help buying conditions," he added.

The company will produce over 2,000 Xylos a month, which accounts for over 20 per cent of its monthly sales of multi utility vehicles.

Others like Hyundai and Fiat, which have enjoyed double-digit growth so far this year, will launch one new product each in December and January. Hyundai will launch the i20 while Fiat will launch the Linea sedan.

"We are expecting to sell around 1,250 i20s every month. We expect the credit squeeze on loans to ease and interest rate to drop by January when the new product will hit the market," said a senior Hyundai executive.

The current month is not expected to post healthy growth for the car industry because leading financiers like ICICI, HDFC, Kotak and Axis have not cut lending rates for auto loans. Besides, many buyers have either cancelled bookings or postponed purchase till next year.

"There will be a positive impact from the new launches,  though one should not expect it to be significant. Sentiments are still down and it could take time for a complete revival," said Yezdi Nagporewala, head, industrial markets, KPMG.

The car industry is expected to grow at 5 to 6 per cent this year, half last year's 12 per cent.

Swaraj Baggonkar
Source: source