Sidelined by SUVs, sedans now making a comeback

Mumbai: Carmakers are showing renewed interest in the long-neglected sedan segment, with at least one new car and a upgraded version of an existing model set to hit the roads within a month.

Toyota Kirloskar Motor Pvt. Ltd and Honda Cars India Ltd are already accepting bookings for their Yaris and Amaze models, respectively, with deliveries set to begin after mid-May.

More such launches are expected during the year with Honda’s executive sedan Civic to hit the roads during the second half of this fiscal, while car market leader Maruti Suzuki India Ltd will introduce a re-worked Ciaz this fiscal.

Carmakers have for the past few years focussed on introducing compact SUVs on the back of strong demand. While the introduction of new sedans will revive sales, competitive intensity is expected to rise as well, analysts said.

Honda’s second-generation Amaze will be pitted against Maruti’s best-selling Dzire, while the Yaris, introduced in the country by Toyota, will compete with established models such as the Honda City, Maruti Suzuki Ciaz and Hyundai Verna.

The Honda Civic will compete with the likes of Toyota’s Corolla, Skoda Auto India Pvt. Ltd’s Octavia and Hyundai’s Elantra.

Overall, sedan sales fell 14.21% in the year ended 31 March as buyers opted for SUVs such as Maruti’s Vitara Brezza and Hyundai’s Creta.

The mid-size sedan segment, which comprises best-selling models such as the City and Verna, saw a 6.55% rise in sales during the past fiscal, led by the new Verna.

During the period, sedans accounted for about 6% of the over 3-million-strong passenger vehicles market.

The reasons behind the renewed interest in sedans are numerous.

Honda, for instance, aims to regain its premium brand image, chief executive Yoichiro Ueno said in a mid-February interview. “We are reviewing our product lineup to become more premium. We also want to have some volumes. What we are trying to achieve is premium positioning in each segment, including the entry-level segment (as for the Amaze),” he added.

Toyota Kirloskar, known for its Innova and Fortuner SUVs, aims to boost sales and fill the space between the company’s Etios compact sedan and the Corolla with Yaris, Shekar Viswanathan, vice-chairman of the joint venture between Toyota Motor Corp. and the Kirloskar Group, said in an interview at the launch of the sedan in February.

Analysts say the launches should not be looked at as a pointedly renewed interest but as company-specific strategies in response to competition. “The Amaze and Ciaz were both due for facelifts since their competing models were refreshed in 2017. More specifically, the Ciaz needed to premiumize since it was moved to Maruti’s premium dealership network (Nexa) in April 2017 without a single change in the model”, said an analyst on condition of anonymity.

Despite a possible short-term rejuvenation in the segment, the future of sedans in the Indian market does not look so bright in the long-term, primarily owing to sub-4 metre SUVs (sport utility vehicles).

“When customers walk into a showroom, they see that the Verna and Creta have the same amount of premiumness, with the Creta having a much better road presence, more interior space and light. In some ways, the Creta starts looking into the Verna. The same happens between the Vitara Brezza and the Swift, for example”, said Deepesh Rathore, London-based co-founder of consulting firm Emerging Markets Automotive Advisors.

Rathore expects higher growth for compact UVs at least for the next 12 months, after which the “rate of growth will rationalize and optimize”.

“There is a lot of growth left in the Indian SUV market because there’s limited product choice”, he said.

  • For the 2018 fiscal, sales of compact UVs jumped 27.5% to 653,914 units, nearly double the size of the Indian sedan market.livemint