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Small car sales have set a new record by crossing the one-million mark in the first three quarters of a single year.
According to the Society of Indian Automobile Manufacturers, sales of models in the A and A2 segments totalled 1.11 million units between April and December 2010, a 32 per cent growth over 840,634 units sold in the same period last fiscal. In fact, total small car sales in 2009-10 were 1.19 million units.
“This is an amazing feat for the Indian auto sector. With this kind of growth, the country will remain a small car market for some time to come,” said Mr Shashank Srivastava, Chief General Manager, Marketing, Maruti Suzuki.
Compact cars account for 78 per cent of total car sales with Maruti's seven models heading the pack with a 55 per cent share. Hyundai is next with 21 per cent while Tata Motors is in the third spot with 11 per cent. While the A1 segment comprises the old warhorse, the Maruti 800 (sold only in smaller towns and cities) and Tata Nano, the A2 slot is occupied by Maruti's Swift, Alto and WagonR, Hyundai's i10, i20 and the Tata Indica. This product category contributed to 1.04 million units in the first three quarters.
“The growth has been high thanks to low market penetration and carmakers launching multiple products. As we go forward, it will be difficult for existing leaders to maintain a large market share,” said Mr Abdul Majeed, Auto Practice Leader, PwC.
New launches
Last year saw new entrants into the small car arena while older models like the i10, WagonR and Skoda Fabia were given a facelift. Of the new launches, the Ford Figo has already clocked 60,000 units while the Nissan Micra, Chevrolet Beat and Volkswagen Polo are also doing brisk business. This calendar will see the Honda Brio, Toyota Etios Liva and a new Maruti Swift hit the roads.
“For at least the next two decades, the Indian market will be heavily dominated by small cars even if the luxury segment grows at a faster rate. This is because we have a large middle class and small cars are the best bet in crowded cities. There will also be a lot of segmentation like luxury compacts,” said Mr Majeed.
Industry experts, however, feel growth may come down next fiscal to under 20 per cent as the low base effect becomes a gradual thing of the past. Capacity constraints for both automakers and suppliers, rising fuel prices, increasing interest rates and commodity prices are also causes for concern.
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