SUVs – A RAY OF HOPE FOR AUTO INDUSTRY REVIVAL

Sales of Indian automobile industry is going through some tough times as it has decreased to the lowest when compared to the last 18 years. The worst-hit segment are the domestic passenger vehicle sales which has seen double - digit decline which includes Hyundai, Honda, Mahindra & Mahindra, Tata Motors and Toyota.

The vehicle sales among all segments has declined by 12.35 per cent ( 60,85,406 units from 69,42,742 units for the period of April-June 2019) similarly the passenger vehicle sales declined by 18.42 per cent (7,12,620 units from 8,73,490 units in the year-ago period), whereas the domestic car sales declined 24.97 per cent (1,39,628 units from 1,83,885 units in the year ago period) as per SIAM.

The following factors has further aggravated the decline in sales

• Application of BS-VI emission norms from 1st April, 2020 has created dilemma in the minds of people to buy a car now or to wait till the new cars with BS-VI engines arrive
• High Bank Loans rate of interest
• Rented or shared car platforms such as (Ola and Uber)
• High fuel prices
• Stagnation in rural wages has increased the rural distress

Government is also pushing the electric vehicle by showing how concern it is about the green goals and cutting crude oil import bills, hence urging the industry to develop and produce EVs In the current year’s Union Budget generous incentives were declared for the purchase of EVs: The government has reduced the goods and services tax (GST) on EVs from 12% to 5% as well as announced tax rebates of up to ₹1.5 lakh on interest paid on loans to buy them no such incentives has been declared for petrol and diesel-powered vehicles, which led the industry to flounder.

There have been massive layoffs. The contracts of 3,000 temporary workers has not been renewed by Maruti Suzuki which are higher in ancillary industries such as auto components makers and dealerships automakers are cutting cost as the purchasing power of rural and urban India has gone down.

The slow down is seen in all the auto segments but still there is a segment which is not getting affected the demand for these technologically advanced cars which are coming out unscathed from auto market these cars do not really seem to be diminishing. Sports Utility Vehicle (SUV) are silver lining in the dark cloud for the auto industry, new technology features in these SUVs is appreciated by customers even in a slowing market which signals the trend that Indian consumer are probably ready to pay a slightly higher price for more premium cars which have internet and safety features controlled by smartphone from inside as well as outside of car and all of them are connected with sim card having 4G connectivity which can also be upgraded to 5G.

The two SUV which we are talking about are MG Hector and KIA Motors. MG Hector is owned by SAIC which launched India’s First Internet Car and received huge bookings whereas KIA Motors is well known South Korean Brand which entered in the Indian Market where the Auto Slump is going down south and still garnered huge bookings KIA and MG are using value and technology and targeting the sweet spot for car upgrades the buyback plan and aggressive positioning are some strategies which is bringing huge successes to them.

The increase in demand of these cars indicates the evolution in the behaviour of Indian customers below 35 years and hence they were able to make people aware about their Brand making people shift from price conscious to value conscious.

“Our MG Shield scheme which offers five years of free service warranty has given confidence to the customers. Having closed the bookings last month, we have a wait list of 15,000 customers. The new products are bringing compelling value proposition in the market and as a result, the consumers are coming to us," said Rajeev Chaba, managing director, MG Motor India.

MG HECTOR has stopped taking further orders due to the reason of production constraints at the initial stage with 28000 bookings whereas KIA has received more than 30,000 bookings in the first six weeks also no car were launched in the same segment by big brands and hence their silence helped the new brand.

Lot of millennials and corporate executives were looking for a new option which is met by above brand with the international appeal and design also the category of people has deep pockets which can afford the vehicle even in slowdown.

Kia and MG Motor has worked a lot on marketing promotions leveraging television, digital, print and on-ground media across the country where they have collectively spent ₹100 crore or so in the last year and half even the brand ambassador have fan following and they are role model for millennials Benedict Cumberbatch—brand ambassador of Hector—and Tiger Shroff for SELTOS were huge success for the brand. The price for Kia SELTOS ranges between Rs 10 lakh to Rs 17 lakh, MG Hector ranges between Rs 13 lakh to Rs 18 lakh.

KIA kept all basics right i.e. product, network, price, and promotion. Indian consumer wants were identified by doing research for at least three years before the launch and then they came out with a tailor-made vehicle for the Indian market. Its base price of ₹9.69 lakh made it viable for people to purchase the car. The Unique Selling Point of KIA SELTOS as compared with other players in the market is the competitive price with quality a connected SUV which offers about 37 smart features including remote engine start with AC control, emergency assistance, geofencing, tyre pressure monitoring system and navigation. The brand associates itself with sports which represent young age where it is official FIFA partner and had sponsored 2002 FIFA also it has various sponsorship in cricket as well as tennis too.

KIA SELTOS is able to attract consumers through mass media; trade shows, electronic media, online blogging, broadcasting, brochure, flyers etc while focussing its below-the-line promotional strategies including direct customer contact, direct mail campaigns, sales promotions, targeted SEM and sponsorships they also have online portal to establish and strengthen relations with customers online while working for environmental issues by inculcating an urge among people for planting trees.

MG HECTOR holds over 50% market share in its segment within few months of launch. The unique as well as hi-tech experience which it is delivering is the reason for becoming consumer favourite. It is to be noted that HECTOR is the first car in the country which is delivering over-the-air software updates directly to the car’s head unit.

The introduction of Internet cars along with the introduction of luxury car features in the mass and premium segments has attracted many people to these brands HECTOR has also invested ₹2,200 crore in upgrading its manufacturing facility in Gujarat (Halol), and the investment  for the upcoming three-four years will reach ₹5,000 crore as said by Rajeev Chaba, president and managing director, MG Motor India

The brand gives the options for multiple fuel available in automatic, hybrid, petrol, and diesel while rivals like Tata Harrier and Mahindra XUV500 are limited to diesel.

“Hello MG” is a voice command feature which allows you to operate the sunroof, windows and air-con, apart from infotainment functions. In terms of safety it has features like six airbags, LED headlamps with LED DRLs, front/rear parking sensors with 360° camera, traction control system (TCS), electronic stability program (ESP), ABS with EBD and brake assist, all-wheel disc brakes, and is of fix child-seat anchors.

MG HECTOR price range is between Rs 15.28 lakh to Rs 16.78 lakh, other features such as space, comfort, premium feel and a road presence where the price offered is great value-for-money compared to its competitors 5-year/unlimited km standard warranty and roadside assistance with different maintenance plans attracts huge people MG is educating one girl child for every two weeks if a customer has to wait for delivery of the car which is Worth Waiting For’ programme started by them. The slogan “It's a human thing” helped to position the combination of technology and Emotions and were able to achieve popularity in such a short span of time.

The winning strategy of MG HECTOR and KIA MOTORS is as follows, India is largely a cost competitive market and  these car making company are able to offer feature rich product with value for money proposition and customer delight along with wide sales and service network which has helped them to retain esteemed position worldwide with great design and quality backed up by the partnerships and sponsorships with sports and are getting attention in the market accounting for Vows and Wows they have put forward.

MG Hector has broken the jinx that no Chinese company can do well in the Indian market because of the perception. Industry watchers say new brands like Kia and MG have to be observed for around two years before they can be called successes whereas ACES or autonomous, connectivity, electric and shared mobility, is the way forward for the industry.