The auto industry closed FY 14-15 on a positive note as some players reported their highest ever growth in domestic sales during a fiscal. With overall car sales projected to grow by 6-8% in FY 15-16, positive customer sentiment and several new launches on the anvil, auto majors are set to wage war for lead position. We take a look at their plans for 2015 and what will drive the auto sector to fill ad inventories this year
By Henna Achhpal
Following a dismal 6% fall in sales of passenger vehicles during FY 13-14, things are looking up for the auto industry in India. The sector recorded 7% growth in sales for FY 14-15, the best since FY 10-11’s double digit growth of 28%. In March 2015, while Maruti Suzuki maintained its market leadership, Honda Cars replaced Mahindra & Mahindra at third place after reporting 23% growth. Mahindra & Mahindra that launched its new gen Scorpio in September last year saw overall sales fall by 8% in FY 14-15. Hyundai maintained its place at No. 2. Although Tata Motors saw negative numbers, the company is on a growth trajectory with its Horizonext strategy which includes two new product launches every year until 2020. Honda Cars will continue its growth momentum in India with the launch of its new Jazz. Volkswagen India plans to limit spending on sales and marketing operations whereas Volvo Auto India has almost doubled its marketing budget in a bid to challenge leaders in the Indian luxury car market. Global rivals, Mercedes-Benz and Audi, are battling it out for leadership in the luxury car market with extremely thin margins. Third in the race, BMW India, recently launched the country’s first hybrid supercar, the BMW i8. While the Indian luxury car market has grown eight times in the last seven years, it was the first time in 2014 that Mercedes-Benz produced an India specific TVC. Tata Motors owned British brand, Jaguar Land Rover, too decided to Indianize its TVC for the Jaguar XJ which showed Kareena Kapoor in the backseat.
Global luxury car-makers are bullish about the Indian market, SIAM has predicted a growth of 6-8% for FY 15-16, and current market leaders are eyeing rural reach and expansion of their network to smaller towns. Not to forget the slew of launches in the pipeline from several auto companies. As auto companies battle it out for the lead, one can expect to see several full page ads in dailies, from English to regional, and splash of hoardings that help build their aspirational value among customers. All in all, 2015 promises to be a dramatic year for the auto industry in India.
MARUTI SUZUKI
The country’s largest car manufacturer by sales has a reason to celebrate as it recorded its highest ever sales in a fiscal. FY 14-15 saw sales of Maruti Suzuki grow by 11.9%, with passenger cars growing by 9.3%. RS Kalsi, Executive Director – Marketing & Sales, Maruti Suzuki India attributed this growth to new models and increasing rural presence. He said, “While new models have played a significant role in the challenging environment; efforts to expand our network both in rural and urban areas have paid off as well.” The company’s rural sales grew by 23% in FY 14-15, and Maruti Suzuki now plans to increase its rural penetration by over 20%. In the third quarter of FY 15, the company reportedly crossed its marketing budget by Rs 70 crore to push sales of its newly launched cars among which was the Ciaz that saw Ranveer Singh as brand ambassador. In FY 16, Maruti Suzuki is set to enter the fast growing compact SUV category with two new launches. Hakuhodo Percept recently won the business of a new hatchback from Maruti Suzuki slated to launch in May. The campaign budget for the new car is estimated to be around Rs 100 crore with focus on ATL and Digital media.
LOOKING BACK
Roped in Ranveer Singh as the face of its new launch, Ciaz
LOOKING AHEAD
Plans to enter the compact SUV segment
Increase rural presence by over 20%
HONDA CARS INDIA
Soon after Honda Cars reported a whopping 41% growth in domestic sales for FY 14-15, its highest ever, the fourth generation Honda City achieved its 1 lakh sales mark in India. Honda Cars, the fastest growing passenger car manufacturer in the country, launched Mobilio last year and its fortune changer, Amaze, in 2013. To propel this growth further, the company is launching the new gen Honda Jazz this year, plans to enter the compact SUV segment with a new launch later in the year, and is targeting 100 new dealerships in FY16 with a focus on existing and new Tier III markets. In the last few years, the company has shifted its strategy to target the mass segment, moving beyond Hindi and English speaking audiences to regional. The company has also been experimenting with unique celebrity associations and Digital media. While for a pre-launch campaign of Mobilio, the company released a series of web videos with comedian Kapil Sharma; for its Amaze, Honda Cars launched a web series with author Chetan Bhagat. Honda Cars recently handed over its media business to GroupM’s Motivator, which includes Digital media, and is estimated to be over Rs 100 crore.
LOOKING BACK
Released web video series with Kapil Sharma for Mobilio; and another with Chetan Bhagat for Amaze
LOOKING AHEAD
Launching new gen Jazz
Plans to enter the compact SUV segment
Targeting 100 new dealerships in FY 16
HYUNDAI MOTOR INDIA
Standing at market share of 21.6%, its highest since its entry in India, Hyundai Motor India too reported double digit sales growth at nearly 11% in FY 14-15. Last year, the company launched Elite i20 which went on to bag the ‘Indian Car of the Year’ title, and its family sedan Xcent for which Shah Rukh Khan was announced the brand ambassador. Hyundai and Khan share one of the longest celebrity brand associations spanning over 16 years, beginning with the iconic Santro. The company also released its first ever corporate campaign focusing on India, Life is Brilliant, in November last year. With an aim to achieve the 5 lakh sales mark this year, Hyundai has already unveiled the i20 Active crossover, and plans to enter the compact SUV segment with ix25. On the outlook for 2015, Bo Shin Seo, MD & CEO, HMIL said, “We intend to continue our growth in 2015 and with new products coming next year, we will create the right conditions to reinforce our claim to leadership over the long term.”
LOOKING BACK
Launched Elite i20 and Xcent
Released first corporate campaign focusing on India
LOOKING AHEAD
New launches include i20 Active crossover and ix25
Aim to achieve 5 lakh sales mark
TATA MOTORS
Despite new launches, Zest and Bolt, FY14-15 wasn’t the best for Tata Motors that saw domestic sales of its passenger cars drop by 3%. However, from a larger perspective, this may only be a minor setback for the company that plans to introduce two new products every year until 2020 as part of its Horizonext strategy. Delna Avari, Head – Marketing Communication & Services, Tata Motors said, “Zest and Bolt were the first two products that came out under this. We looked at the entire approach of the launch in phases. Right from building awareness of what we wanted to do as a philosophy, to what these products stood for. It was about getting our message out to the consumer saying that we are changing and what we are bringing to you is different.” The newly launched Tata Bolt has associated with Royal Challengers Bangalore as principal sponsor for the on-going IPL 8. The company is aiming for double digit sales growth in FY 16. Mayank Pareek, President – Passenger Vehicle Business, Tata Motors said, “The industry is expected to grow in double digits and Tata Motors will be better than the industry growth.” One of the strategies to achieve this target seems to be aggressively expanding the company’s network with particular focus on rural areas.
LOOKING BACK
Launched Zest and Bolt
LOOKING AHEAD
Two new products every year till 2020
Aggressive expansion of network
VOLKSWAGEN INDIA
Although Volkswagen India’s domestic sales fell by 14% in FY 14-15, the German auto major is all set to alter its strategy in India for more positive results. The new plan may already be working considering the company reported 22% growth in sales for the month of March 2015. Volkswagen Polo and launches of the new Jetta and Limited Edition Vento Magnific are said to have contributed to this growth. Expanding its portfolio in India is one of the key strategies and the company will introduce several new models in the market, the new Beetle being one of the significant launches, over the next two years. The brand which has given its customers some innovative marketing experiences will unfortunately be tightening purse strings this year when it comes to sales and marketing operations as part of its new strategy.
LOOKING BACK
Slow growth Launched new Jetta
LOOKING AHEAD
Strategic changes for Indian market
Launch of new Beetle
FORD INDIA
Another player that had a disappointing FY 14-15 was Ford India which witnessed a drop of 11% in domestic sales. On the poor performance, Anurag Mehrotra, Executive Director – Marketing, Sales & Service, Ford India commented, “With the economic recovery being slower than anticipated and a high interest rate and inflation environment, customers continue to defer their discretionary spends. Ford’s faith in India’s long term growth prospects remains intact. We are continuing to invest in India’s future growth potential.” The company plans to launch four new cars in the country this year which include the Figo Aspire, new Figo, new Endeavour, and the Mustang, entering various segments as a result. Preparing for these launches, Ford India inaugurated its second production facility in India, in Gujarat.
LOOKING BACK
Slow growth
LOOKING AHEAD
Four new launches in FY 16
MERCEDES-BENZ INDIA
Mercedes-Benz India has clocked its ‘best ever’ month reporting 53% sales growth in March 2015, ‘best ever’ quarter with 40% growth in Jan-March 2015, and ‘best ever’ financial year recording 17.5% growth in FY 15. The company believes that these numbers reflect improving customer sentiment and the customer focused approach adopted by the brand. Eberhard Kern, MD & CEO, Mercedes-Benz India said, “Our product offensive across the spectrum, the value added services and finance programmes, the unique customer engagement initiatives have all been well appreciated, resulting in Mercedes-Benz’s best ever month, best ever quarter and even the best ever financial year.” 2014 also saw Mercerdes-Benz unveil its first ever India-specific TVC which was a part of the Ah My God campaign for the launch of CLA 45 AMG. Last month Mercedes-Benz simultaneously launched two specialty cars in India, the new CLS-Class Coupe and the E-Class Cabriolet. Plans for 2015 include 15 new products with a strategy to grow in all segments of the luxury car market, 15 new dealers, and yet another double digit growth.
LOOKING BACK
First ever India-specific TVC
Reported best ever month, quarter, and fiscal
LOOKING AHEAD
15 new launches and 15 new dealers
AUDI INDIA
While Audi India retained its leadership in the market with 11.5% sales growth in FY 15, what made the race exciting was that the company beat rival Mercedes-Benz India by 79 units. This, despite having only one major launch, Audi A3, in FY 14. But FY 16 is going to see several launches from the company, as many as 10, which includes the new sports car TT and new Audi Q3. Joe King, Head, Audi India told Economic Times in a report, “Audi is the only luxury car brand in India that has grown consistently and continuously over the last seven years. We have consciously followed a strategy which delivers consistent growth and not sporadic peaks. We made the choice to not blindly chase volumes, we’re here for the long-term and not just to ‘sell more cars this year’.” A combination of facelifts of existing models along with new models in various segments; these new launches aim to maintain the company’s leadership in India’s luxury car market. The company also recently inaugurated its first dealership in North-East India in Guwahati, where it expects to sell 150-200 units in the first year.
LOOKING BACK
Maintained market leadership
Reported best ever month, quarter, and fiscal
LOOKING AHEAD
10 new launches in 2015
VOLVO AUTO
All set to challenge luxury car market leaders in India, and a growth target of 67% for 2015, Volvo Auto India has almost doubled its marketing budget as compared to 2014. Sudeep Narayan, Director – PR & Digital said, “We are in the process of building the Volvo Brand as a Swedish luxury brand. Volvo Cars Global sees India as a high growth potential hence the budgets have been allocated to steer this growth.” The company plans to launch a small luxury hatchback V40 diesel and V40 Cross Country to achieve 2,000 units in annual sales. Explaining the marketing strategy, Narayan said, “We will carve a communication niche in India and look to target HNIs in a compelling manner. Apart from the usual ATL/OOH, we have been associated with crème events such as the HT Leadership Summit, India Today Conclave and IMA CEOs Meet to name a few. The Volvo Cars Lounge at T3 Airport (Domestic departure) bears testimony to our differentiated marketing approach.” Currently at 14 dealers, Volvo Auto India hopes to have 20-22 dealers across the country by the end of 2015.
LOOKING BACK
2,000 units in annual sales
LOOKING AHEAD
New launches and dealers
BMW INDIA
Third in the Indian luxury car market race, BMW India, is on a spree of opening dealerships across the country. Latest to join the league was BMW’s second dealership in Andhra Pradesh at Vijaywada, bringing the total number of BMW dealerships in India to 39. Philipp von Sahr, President, BMW Group India said, “We believe that the circle of ‘Sheer Driving Pleasure’ can only be completed by introducing innovative products, building world class dealerships, maintaining state-of-the-art local production facilities and having a motivated workforce that engages passionately with our clientele to deliver premium services ahead of time.” The plan for 2015 is to achieve 50 outlets by the end of the year. Currently, the German automaker has nine cars in its Indian portfolio. In February this year, BMW launched India’s first hybrid supercar, the BMW i8.
LOOKING BACK
Third in the Indian luxury car market
LOOKING AHEAD
50 dealerships in India by the end of 2015
