Car firms scale back on new launches as norms tighten

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New Delhi: Car launches have come down by half in the last four years as automobile manufacturers struggle to adapt to rapidly changing regulations, industry executives said.

There were 10 launches in 2013, which fell to nine in 2014 and rose to 12 in 2015, before plunging to five each in 2016 and 2017, Morgan Stanley Research said.

The decline from 2016 onwards coincides with heightened awareness of vehicular pollution and India’s decision to move from Bharat Stage IV (BS-IV) to BS-VI, the toughest automobile emission norms in the world, skipping the intermediate BS-V.

With new safety and crash-testing norms taking effect in October 2018, there is little chance of new launches any time soon.

“Most of the carmakers are either reeling under losses or have huge investments in upgrading their products to BS-VI emission norms by 2020. Hence, the number of new product launches has dried up. The Indian market was supposed to touch the 3 million sales mark two years back, but due to certain challenges, the market did not grow,” a top executive at one of the leading auto manufacturers said on condition of anonymity.

According to two industry executives Mint spoke to, except the top five carmakers, most firms have refrained from investing further as sales have stagnated at around 3 million.

Take out Maruti Suzuki India Ltd, India’s largest carmaker, and it gets worse.

Even South Korean firm Hyundai Motor India Ltd—the second largest car manufacturer in the country—has not launched any new brand since the Creta in 2015.

The two exceptions are Maruti Suzuki, which launched the S-Cross, Baleno, Ignis and Vitara Brezza in the last three years, and Tata Motors Ltd with the Tiago, Tigor, Hexa and Nexon.

In the same period, Toyota Kirloskar Motor Pvt. Ltd, Ford India Pvt. Ltd, Nissan India Pvt. Ltd and Volkswagen India Pvt. Ltd have launched just one product each in the market, and their product pipelines do not feature any new offerings in the next two years.

“Apart from Maruti, most carmakers have been very cautious about investing further in the market, the reason being the jump from BS-IV to BS-VI norms and other challenges like profitability. Also, the industry has made losses from judicial interventions as well–like banning diesel cars, trucks and suddenly stopping the sales of BS-III vehicles. GST and demonetization also played their part in pulling down the market,” said another senior industry executive, also requesting anonymity.

Japanese carmaker Toyota has already indicated that it may not introduce any new vehicle in India before BS-VI norms kick in.

The Union government’s push towards electric vehicles has also sent carmakers back to the drawing board.

“The automobile business is a long-term game; any sudden changes can throw things out of gear. The introduction of BS-VI norms was brought forward by two years which has been a huge setback. Still, the companies are coming out with new products since that is the only way one can survive in the market,” said Kumar Kandaswamy, partner, Deloitte India.