Mini-cars enjoy maxi sales in struggling market

Rashmi Pratap Mumbai | Updated on March 12, 2018 Published on October 28, 2013


Mini segment sees 9.4% growth in sales

The auto sector is beginning to see green shoots of recovery after declining sales for more than a year.

A testimony to this is the 9.4 per cent growth in sales of mini-cars in the first six months of this fiscal even as total passenger vehicle sales are down 2.3 per cent during the period.

“After nearly two years, the mini segment has started to show growth.

“Entry-level customers are the first to go out of the market when things are uncertain. And they are the first to return when things improve,” said V.G. Ramakrishnan, Managing Director at consultancy firm Frost & Sullivan.

“This segment was greatly impacted by the slowdown and increase in interest rates and fuel prices. Their return is the first sign of revival, in my view.”

The mini-car segment includes Maruti 800, Alto, AStar, Wagon R, Hyundai Santro and Eon and General Motors Spark.

Typically in the price range of Rs 3 lakh to 5 lakh, these cars account for almost a fourth of the country’s total passenger vehicle sales.

When interest rates rise and cash flows become uncertain, potential buyers of these cars — mostly first-time buyers — tend to step back.

Sales in this segment have been growing since April this year, barring June.

In fact, in July and August, sales grew 16 and 37 per cent, respectively.

‘Can’t get worse’

“The value-for-money proposition by some carmakers has driven sales of mini-cars. Things have bottomed out for the industry and unlikely to get worst than this,” said Abdul Majeed, Leader, Automotive Practice, PricewaterhouseCoopers.

While the mini-car segment is looking up, Majeed said, the overall sentiment for the auto sector still remains subdued.

“We expect the market to start looking up by the second quarter of FY15,” he added.

Overall, the domestic passenger vehicle industry sales of 1,90,053 units in August were also up 4.5 per cent over the year-ago period, reversing an eight-month-long negative volume growth.

This was led by the passenger car segment that grew over 15 per cent.

P. Balendran, Vice-President, General Motors India, said: “The growth in mini segment is coming from new models that have been introduced in the last few quarters. There has also been a spurt in sales due to the festival season.”

Mini-cars are gaining in popularity not only because of fuel efficiency but also low maintenance costs.

As driving and parking in cities become more challenging, this segment is likely to grow further.


Published on October 28, 2013
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