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Automakers battle over Indian market
Publication Date : 18-04-2012
Competition among automakers has been heating up in India, where annual car sales have topped 3 million units.
Suzuki Motor Corp, which currently holds the highest share in the Indian auto market, is closely followed by South Korea's Hyundai Motor Co.
The automakers seem to be entering into a war of attrition, as some companies have begun selling an increasing number of cars at lower prices amid a slowing global economy.
According to the Society of Indian Automobile Manufacturers, about 3.43 million new cars, including commercial vehicles, were sold in India in fiscal 2011, up 7.6 per cent from the previous year.
High sales growth rates of about 20 per cent continued for two consecutive years in fiscal 2009 and 2010. However, passenger car sales, which account for about 80 per cent of all vehicles, decreased due to an increase in car loan interest rates and rising gasoline prices.
"[These factors] affected customers seeking low-cost automobiles," a Suzuki Motor official said.
Suzuki's passenger car sales dropped by 11.2 per cent from the previous year, registering year-on-year losses for the first time in nine years.
Suzuki's market share in India, which was about 50 per cent in fiscal 2009, declined to under 40 per cent.
In addition to a decrease in output following strikes at its Indian factories, Hyundai's new compact cars sales contributed to the reduction in Suzuki's sales.
In October, Hyundai began selling its Aeon compact car at prices starting at about 430,000 yen (US$5,300). Suzuki's leading model, Alto, was sold at a starting price of about 370,000 yen ($4,600).
Among Japanese automakers, Toyota Motor Corp. and Nissan Motor Co. are stepping up marketing efforts in India.
Toyota introduced its compact car Etios at a starting price of about 640,000 yen ($7,900) in December 2010. In fiscal 2011, the company's Indian sales jumped by 90.5 per cent from the previous year on brisk Etios sales.
Nissan Motor Co. also launched its Micra compact car, known as March in Japan, for prices starting at about 660,000 yen, which led to fiscal 2011 sales to jump 2.6 times from the previous year.
India, which has a population of 1.2 billion people, is a powerful market with great growth potential.
However, it has become difficult for automakers in India to differentiate themselves from their rivals solely by launching low-priced cars, observers said.
The survival of automakers in the Indian market will depend on whether they can broaden the selection of cars and attract customers from all walks of life, observers said.