A Peek into the Future of the Auto Industry
It’s a different India from yore, at least in automotive parlance. And we’re not talking 1991 (economic liberalisation). Or 1983, when Maruti Suzuki (then Udyog) launched India’s first modern car, the Maruti 800, ushering in a revolution that has matched the economic transformation of this country from a global laggard to a global leader.
We’re talking merely 10-12 years ago. India was a ‘small car’ country, and small meant really small, the M800-Alto-Zen-WagonR-Santro country. The Maruti Swift, India’s first successful premium hatchback—there were a couple earlier that customers didn’t fancy—launched in 2005, was facing its first real challenge. It was also around the time of Maruti’s 25th anniversary in India. That was when a bunch of premium hatchbacks were launched by other companies—including Ford Figo, Chevrolet Beat and Nissan Micra, among others—to take on the then matchless Swift and possibly overtake it. That, of course, didn’t happen. Swift is still very much around, and the others have disappeared. But their disappearance is not the point. The point is that their appearance brought about a transformation in the optics of what car you should buy, and premium hatchbacks begun to rule the roads.
Indians were beginning to earn more, and were willing to shell out a few bucks more to buy a more premium product. An inkling of this had showed up a couple of years earlier. Hyundai, India’s second-biggest car maker for like, forever, launched a premium hatchback called the i20 in January 2009, which was so expensive—for India—that the company did not expect to sell more than 500 units in a month. In the first month, it sold 1,708, shocking the company’s executives and its then CEO. And then it accelerated. By August 2010, it was selling more than 7,000 units every month. The success of the i20 gave a lot of heart to companies that were earlier chary of launching expensive hatchbacks.
What that era did was gradually erase the dominance of the ‘really small’ car, and the premium hatchback became the car to launch for car makers, and the car to have and show off for the middle class. India was no longer a small car country. It was a premium hatchback country. And even among premium hatchbacks, the entry-level model was not selling much. It was the mid-level model, with some bells and whistles, that was keeping the cash counter super busy. Rising India? You bet. Soon enough, premium hatchbacks as a collective started outselling small cars, and then dominating the passenger car landscape in India.
Around the same time, another seed was planted, a seed that has now bloomed fully into a new tree. SUVs were sold by Tata Motors (Safari, Sumo) and Mahindra & Mahindra (Bolero, Scorpio) for donkey’s years. The first real challenge to their dominance came from the Renault Duster in 2012. The Duster’s success took people by surprise. A French car, with no pedigree in India, very little reach in terms of service centres. And yet, it soon became the ‘car’ to have. The Duster’s success brought in its wake a flood of SUVs over the past decade. Tata Motors and M&M have a line-up of SUVs that is unrecognisable from 10 years ago. Companies like Kia and MG Motor have only launched SUVs in India, despite having other configurations in their arsenal. Today, when you roll your car out of your garage and onto the highway, you’re practically surrounded by SUVs. Not surprisingly, the SUV has now overtaken premium hatchbacks in sales. India is now an SUV nation.
About three years ago, another seismic shift started taking shape, but this one is moving far quicker than the earlier shifts. In June 2019, MG Motor launched its first car in India—the MG Hector, an SUV of course—with an unusual badge near its tail light that said “Internet Inside”. Coupled with a famous British actor—Benedict Cumberbatch—to promote it through nifty advertisements on television, the car became an overnight sensation. The company’s President and MD Rajeev Chaba said the car was a product of collaboration between MG and tech companies like Microsoft, Adobe, Unlimit, SAP, Cisco, Gaana, TomTom, Nuance and others. Soon enough, other manufacturers also piled on the tech bandwagon. And today, cars boast features and snazzy tech gizmos that make you wonder if it is a car or a computer on wheels. More likely the latter, actually.
There are challenges before other segments of the automobile industry, too. Read about how India’s auto ancillary companies, many of who have built huge businesses based on exports, are dealing with the impact of the Russia-Ukraine conflict. Also read about commercial vehicles and their journey on the comeback trail, after a horrendous couple of years, starting even before Covid-19 induced lockdowns.
In the midst of all these challenges and stirring comebacks, the biggest shift of all that is currently on, is the shift to electric vehicles. To call it a ‘shift’ would perhaps be premature, because the journey for EVs in India has just begun. There are many, many challenges and bottlenecks to overcome, including technological, logistical, infrastructural, and psychological. It didn’t help EVs’ cause when a few electric scooters caught fire, apparently without reason. Of course, there’s always a reason, but in this case, there were too many guesses at what the real reasons are. But the horrifyingly spectacular, graphic videos and imagery of scooters going up in flames, multiplied in impact through the virality of social media, might just set back this ‘transition’ to an electric future by a few years. It might also have the positive effect of nudging ambitious businesses to actually do their homework well before launching a product, which is the mainstay of manufacturing process. Hopefully, we will see more of the latter than the former.
Enjoy the package.
