New Delhi: Cars and utility vehicles priced above Rs 10 lakh sold five times faster than the previous fiscal, registering a year-on-year growth of 38 per cent as compared to a growth of seven per cent for the latter. As a result, the market share of premium cars grew by 500 basis points (bps) to 30 per cent in the last fiscal, as against 25 per cent in FY21, shows a study by Crisil.
best selling models like hyundai Creta, Maruti Ertiga and Ciaz, Mahindra Bolero and Scorpio, Honda City, Ford EcoSport and Toyota Innova (which together accounted for 68% of the high priced cars sold in FY19), have seen a decline in sales since FY19. However. , New launches have outperformed, filing gap, and contributed significantly to the overall sales volume in the segment.
Of them, 19 accounted for 32 per cent of the volume share of high-end cars in FY22. The new high priced models are performing well Seltosmaruti xl6, MG Hector, Mahindra XUV700 and Hyundai Alcazar. Similarly, in the last 5-6 financial years, two-wheelers priced above Rs 70,000 have consistently sold more than those priced below Rs. This is because of 40-45 per cent increase in cost of ownership and 50-55 per cent increase in cost of acquisition since FY15.
Selling Maruti’s lowest priced vehicles like Alto, Swift, Baleno, Vitara Brezza, Celerio and DZire; And Hyundai’s i10 and i20 (which together accounted for 56 per cent of low-priced cars sold in FY19) have been on a decline for three financial years now. Result: Only 39 models of low-cost cars were available in the last fiscal, compared to 54 in the financial year 2016. -Price Cars in FY 2022.
The major reasons for this were the huge gap in the income sentiment of the respective target consumers, sharp rise in the prices of low-end cars, fewer options (some manufacturers exited this segment), and several new launches which have increased, Crisil said in a statement. That said, preference for higher priced cars.
In India, generally, low priced cars are bought by first time users or those upgrading from used cars.
Due to the pandemic’s impact on earnings sentiment for entry-level car buyers, purchases and upgrades are getting postponed.
CRISIL Research estimates that the employee costs of large and medium companies – a proxy for income sentiment among affluent buyers of high-priced cars – have risen more than those of small and medium-sized companies, which typically tend to be lower-priced. car buyer.
There has been a 15-20% cumulative increase in the sticker price of lower-end cars in the last 4 financial years, due to the increasing stringency of safety regulations (mandating ABS, front-row airbags, speed warning alarms, seatbelt reminders, rear parking sensors) ) , crash test norms) and changes in BS-VI emission norms. These have been a drag on sale.
Due to change in consumer preferences, automakers are also focusing more on higher price segments. In FY15, there were 29 models in the low-end segment; Today, it has 12. In contrast, models in the higher priced segment have increased from 71 in FY15 to 93 in the last fiscal, driving sales.
In short, consumer preference is slowly shifting from lower priced models that previously performed well to similarly priced UVs. Some people are preferring to buy a used car in the expensive segment instead of spending the same amount for a lower segment car.
Crisil expects the share of high priced cars to remain at 30% versus 25% earlier, due to flexible income from wealthy buyers and traction for new models.
best selling models like hyundai Creta, Maruti Ertiga and Ciaz, Mahindra Bolero and Scorpio, Honda City, Ford EcoSport and Toyota Innova (which together accounted for 68% of the high priced cars sold in FY19), have seen a decline in sales since FY19. However. , New launches have outperformed, filing gap, and contributed significantly to the overall sales volume in the segment.
Of them, 19 accounted for 32 per cent of the volume share of high-end cars in FY22. The new high priced models are performing well Seltosmaruti xl6, MG Hector, Mahindra XUV700 and Hyundai Alcazar. Similarly, in the last 5-6 financial years, two-wheelers priced above Rs 70,000 have consistently sold more than those priced below Rs. This is because of 40-45 per cent increase in cost of ownership and 50-55 per cent increase in cost of acquisition since FY15.
Selling Maruti’s lowest priced vehicles like Alto, Swift, Baleno, Vitara Brezza, Celerio and DZire; And Hyundai’s i10 and i20 (which together accounted for 56 per cent of low-priced cars sold in FY19) have been on a decline for three financial years now. Result: Only 39 models of low-cost cars were available in the last fiscal, compared to 54 in the financial year 2016. -Price Cars in FY 2022.
The major reasons for this were the huge gap in the income sentiment of the respective target consumers, sharp rise in the prices of low-end cars, fewer options (some manufacturers exited this segment), and several new launches which have increased, Crisil said in a statement. That said, preference for higher priced cars.
In India, generally, low priced cars are bought by first time users or those upgrading from used cars.
Due to the pandemic’s impact on earnings sentiment for entry-level car buyers, purchases and upgrades are getting postponed.
CRISIL Research estimates that the employee costs of large and medium companies – a proxy for income sentiment among affluent buyers of high-priced cars – have risen more than those of small and medium-sized companies, which typically tend to be lower-priced. car buyer.
There has been a 15-20% cumulative increase in the sticker price of lower-end cars in the last 4 financial years, due to the increasing stringency of safety regulations (mandating ABS, front-row airbags, speed warning alarms, seatbelt reminders, rear parking sensors) ) , crash test norms) and changes in BS-VI emission norms. These have been a drag on sale.
Due to change in consumer preferences, automakers are also focusing more on higher price segments. In FY15, there were 29 models in the low-end segment; Today, it has 12. In contrast, models in the higher priced segment have increased from 71 in FY15 to 93 in the last fiscal, driving sales.
In short, consumer preference is slowly shifting from lower priced models that previously performed well to similarly priced UVs. Some people are preferring to buy a used car in the expensive segment instead of spending the same amount for a lower segment car.
Crisil expects the share of high priced cars to remain at 30% versus 25% earlier, due to flexible income from wealthy buyers and traction for new models.