Economy

AMT tech helps automatic cars break barriers; sales on the rise

Nandana James Mumbai | Updated on June 21, 2019 Published on June 21, 2019

Carmakers have invested in right tech to improve performance and fuel efficiency of automatic cars

The preference for automatic cars is on the rise due to a widespread adoption of automated manual transmission (AMT), which has bridged the price gap between automatic and manual cars.

Increased fuel efficiency, worsening traffic conditions, introduction of automatic cars within the small car segment and the gradual dispelling of misconceptions about automatic cars have also contributed to this trend.

“The share of automatics in India was less than 5 per cent three years ago in passenger vehicles. Industry experts believe that this technology has the potential to account for as much as 40 per cent of the total market in the next five years (2023-24),” said Rajeev Singh, Partner, Deloitte India. Deloitte said the current share is estimated to be around 10-12 per cent of the passenger vehicle market.

Higher share

Maruti Suzuki, India’s largest car maker, has sold over five lakh cars with automatic transmissions since 2014, registering a CAGR of 58 per cent, said Shashank Srivastava, Executive Director (Marketing & Sales), Maruti Suzuki India.

Of the 1,729,826 passenger vehicles it sold in the domestic market in 2018-19, 2 lakh were automatic variants, which constitutes 11.56 per cent of the total sales. This also constitutes over 16 per cent of total sales of the models where automatic transmission (AGS, CVT, AT) is available.

At Tata Motors, the automatic car sales constitute around 25 per cent of the sales of those models where the automatic transmission option is available, while it used to be 5 per cent back in 2016, said Vivek Srivatsa, Head, Marketing-Passenger Vehicle Business Unit, Tata Motors. When the entire portfolio is taken into consideration, including manual cars, the automatic car sales would take up around 15 per cent of the total sales.

At Volkswagen, one in every three cars that it sells in India is a DSG automatic transmission across its entire product portfolio of Polo, Ameo, Vento, Tiguan and Passat, said Volkswagen Passenger Cars’ spokesperson. Volkswagen’s automatic transmission contributed nearly 32 per cent to its overall sales across its range in India for FY18-19.

As for Volvo Cars, which operates in the luxury car segment, all of its cars are automatic by default, said the company’s spokesperson.

Affordable technology

This is because the adoption of automatic transmission — in percentage terms and not by absolute volume — is higher among large cars and UVs as pricing is a less critical decision-making factor for the target marketcompared to a small car, pointed out Hetal Gandhi, Director, CRISIL Research.

In the sub-₹12 lakh passenger car space, automatic transmission accounts for 12-14 per cent. The share rises to more than 50 per cent for cars priced above that, said Deloitte’s Singh.

The narrowing of the price gap between automatic and manual cars due to the AMT is a major factor leading to the increasing preference for automatic cars.

With the introduction of AMT by Maruti (Celerio) in 2014, the prices have dropped to just half the price of a fully automatic transmission, said Singh. “With the widespread penetration of AMT in models across Maruti, Tata Motors and Hyundai brands, the price between AMT and fully automatic car now is only around ₹50,000-60,000, well within the affordable range for a customer,” he explained.

Maruti’s Srivastava drew on this point further: “With relevant affordable technology in the offing, coupled with customer awareness, the penetration of two pedal technologies is expected to grow. Simply put, affordability and awareness are key factors to increase penetration of automatic cars. For instance, AGS (AMT) was introduced by Maruti Suzuki in Celerio in 2014 and penetration is as high as 34 per cent in 2018-19. Indian buyers are cost conscious. Introduction of relevant technology at (an) affordable price is the key. For instance, the AGS technology finds high relevance for Indian car buyers due to its affordability, efficiency and easy maintenance.”

Nissan India’s Hardeep Singh Brar, Director, Sales & Commercial, affirmed that in the recent years, the use of AMT in entry-level cars is more prevalent than before. “The growth of AMT surely signifies the customer’s inclination towards comfort, ease and convenience at an affordable price point,” he added.

Small car segment

Another related factor would be the introduction of automatic models within the small car segment, which constitutes around 60 per cent of the passenger vehicle (cars and utility vehicle) market, which has given a push to the penetration of such vehicles, said CRISIL’s Gandhi.

“We (Nissan India) have seen a very positive and significant change in consumer behaviour towards adopting the AMT technology in the entry-level segment. Currently, Datsun redi-GO 1L AMT contributes approximately 25 per cent to the overall sales of the Datsun redi-GO model,” said Brar.

The two-pedal cars reducing driver fatigue by offering a clutch and gear free experience in the congested and traffic-ridden metro cities is another reason, said Gandhi. The preference of automatic cars by first time buyers and the migration of women drivers towards automatic cars are some other factors.

Carmakers have also invested in the right technology to improve performance and fuel efficiency of automatic cars so that buyers will not worry about mileage, said Brar.

Srivatsa added that there was also a perception earlier that the cost of maintenance for automatic cars is expensive and that they are susceptible to fail more frequently. He said that such misconceptions have been clearing up and that “today, there is no reason to believe why an automatic transmission car cannot be as reliable as a manual transmission car.”“Customers in the past had a traditional outlook towards driving and they truly enjoyed the experience of driving a manual transmission car...But, with the advancement in technology, improved fuel efficiency and relatively marginal difference in the price, the customers have become more accepting to automatic transmission,” said Volkswagen Passenger Cars’s spokesperson, as echoed by other carmakers.

Published on June 21, 2019
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