Report - True Picture of Indian Hatchback Market

If you have been an ardent follower of IAB, you sure will notice that we have a soft corner for a hatchback or as the general masses would like to call it – ‘a Small Car’. Sure, we love big Jags and fancy Lambos as much as you do, but it is the whole concept of ‘a hatchback’ that has revolutionized the entire Indian automotive scene.

Each and every manufacturer wants to enter the fray and share a bit of this fastest growing pie. In India, if you are a manufacturer with no hatchback under your portfolio, then you are a nobody.

Right now, the hatchback market is cluttered with over 24 products from various manufacturers. Clearly, the consumer is spoilt for choice to extent that making a choice in itself seems like a daunting task.

So when we wanted to do an ultimate comparo of all the hatchbacks that are currently selling in this space, the most appropriate unit of measurement was total sales. The reason being total sales represent consumer sentiments like no other factor.

This comparo represents the who’s who in the hatchback. Because no matter which car gets crowned COTY, at the end of the day what matters is whether the consumer is willing to write a cheque of his hard earned money for the car.

A little about the comparo….

The comparo is based on the total sales figures for a period of last 6 months. The 6 months are chosen to normalize the spikes and slumps. The comparo ranks the first 20 cars because we believe that after that it all just becomes a bit pointless. The range of hatchback covers everything from Alto to Jazz. So here is a comparison among all the hatchbacks present in India.

Observations

Clearly, the king of the hatchback segment is Maruti’s little Alto. This should come as no surprise considering MSIL’s sells an Alto every 2 minutes. The top 3 winners are almost fixed throughout the time frame (except Dec’10). Surprisingly, the Wagon-R, a car subjected to immense criticism because of boxy design and unusual handling skills, makes it to the podium by outselling the big wigs like Swift, Ritz and even the Figo.

Now let’s look at each segment in the hatchback market and dispel a few myths that are floating around.

Best Entry Level Hatchback: Maruti Suzuki Alto

This segment consists of small hatchbacks for the masses such as Alto, 800, Santro and Nano. This segment is completely a volumes game where the margins are very low. MSIL has this segment completely licked with its contender - the Alto. The second best seller is this segment is NOT the Nano as one would imagine.

It is in fact Hyundai’s age old Santro consistently outselling the Nano for the first 3 months. But the trend is changing because if you see the last 2 months, the Nano has overtaken the Santro. Clearly, people are shifting away from the age old technologies and adopting new ones.

The lack of compliance with the BS4 norms and aging technology has taken its toll on the M800 sales. But it still features in the top 20 list despite doing its job for donkey’s years.

Best A+ Segment Hatchback: Tie between i10 & Wagon R

The A+ segment hatchback is for a consumer who is looking for a bit more space and a bit more comfort when they are traveling and are willing to pay the price for it. They are also for people who looking for a second car for their household. The contenders in this segment are Spark, Beat, i10, Wagon R, Estilo, A Star etc.

The age old myth that the A-Star and i10 are arch rivals certainly holds no water because as you can see the i10 is miles ahead of the A-Star. In fact, the real arch rivals are now i10 and Wagon R.

The clear shocker in this segment has been the Wagon R consistently selling over 14K units every month. Clearly, this segment is a very value conscious segment and Wagon R fits that bill perfectly. It comes with tones of space and a reliable K series engine to do your daily chores without any complaints.

The major disappointments of this segment have been the A Star and the Beat. Even the boxy Zen Estilo has consistently out sold the Beat and A Star (except Jan’ 11). We presume the masses are a bit conservative when it comes to funky designs.

Best B Segment hatchback: Maruti Swift

This segment is the most crowded segment in the hatchback market and a buyer’s nightmare. Each and every manufacturer wants to be a part of this segment simply because it is a balance of profit margins and volumes.

Consumers in this segment are looking out for a feature-rich product that has a bit of snob value. The contenders in this segment are Swift, Ritz, Figo, Indica, Polo, Micra, Punto Fabia and U-VA.  The consumers in this segment are certainly spoilt for choice but at the same time they are very confused because all the contenders are so tightly matched.

The old saying ‘Old is Gold’ is certainly justified in this segment because the outright winner on this segment is Maruti’s Swift. Sure, the Figo has won more than 8 COTY awards this year, but that hasn’t even slightly dented the sales of the Swift. It is consistently selling more than 10K units every month.

But the glimmer of hope for Ford is that the Figo’s sales numbers are certainly on the rise from 6K units in Sept’ 10 to 8K units in Jan’11. The Figo is certainly selling more than the Ritz.

Another good seller in this market is Tata’s Indica. But considering we don’t have the split figures of Vista and V2 we will not pass any judgment for this car.

Amazingly, VW Polo sales figures are constantly rising and it is even outselling its so called ‘cheaper’ cousin - the Skoda Fabia. According to VW’s strategy, the Fabia was supposed to be the Polo for masses but clearly the masses were thinking otherwise. Skoda indeed bought a knife to a gun fight.

Kudos to Nissan who have managed to consistently sell over 1k units of the Micra every month despite of having limited dealerships. The exact opposite has happened with the Fiat, who despite of having access to many Tata dealerships are still struggling with Punto’s sales.

Best Premium Hatchback: Hyundai i20

Finally, we come to the least cluttered segment in the hatchback market. This segment is quite peculiar because the consumers have deliberately brought a hatchback instead of going for a sedan.

They are willingly to forgo the benefit of extra storage space for utmost comfort, luxury and snob value. There are only 2 contenders – Jazz and i20.

The i20 has outsold the Jazz for miles and for very good reasons. In essence, the i20 gives you more or less the benefits of the Jazz without the Honda badge. Where Jazz is struggling with 3 digit sales, the i20 has never once comes below 5K units.

@Honda: Do you still want to stick to your philosophy of ‘Jazz is a very niche product’?

Conclusion

At 30% YoY, the hatchback market is the most mature and fastest growing market in India. The future entrants like Liva, Brio and a few from Proton, Renault and Peugeot only going to spoil the party for MSIL. It would be interesting to see how long can MSIL hold on to its majority stake in the Market.

What do you think about the Hatchback Market? We would love to hear all about your thoughts, suggestions and expectations.