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Car makers tweak models to attract young buyers
Posted on 7th June 2014
Mumbai: Car makers including Honda Cars India Ltd and Hyundai Motor India Ltd are tweaking the looks and features of existing vehicles in their line-up more frequently to attract young customers put off by ageing models.

In the past six months, Honda has launched the All New City, and Hyundai the new Elantra.

Škoda Auto India Pvt. Ltd has launched new versions of the Superb, Renault India tweaked the Fluence and Nissan Motor India Pvt. Ltd face-lifted the Sunny.

More such variants—which the industry calls “refreshed” models—are expected in the coming months.

Facing younger and more demanding customers spoilt for choice, manufacturers are being forced to think up fresh designs and features that are still light on the wallet, said Mayank Pareek, chief executive, sales and marketing, at Maruti Suzuki India Ltd.

“Nearly half of India was born after 1991. These buyers are choosy and fussy, but do not want to pay.”

The trend comes at a time when an economic downturn, high borrowing costs and fuel prices have led to declining sales of automobiles in the country. Sales in the year ended 31 March fell 6% from the previous fiscal year to 2.5 million units, according to industry body Society of Indian Automobile Manufacturers or Siam.

Just a decade back, a mass market car model had a lifecycle of six to eight years, which has now shrunk to five to six years, as new and less expensive cars offering more features enter the market.

Makeovers—if timed well—can help extend the lifespan of a model, said Vivek Nayar, chief marketing officer at Mahindra and Mahindra Ltd, the largest maker of utility vehicles.

The company’s flagship brands Scorpio and Bolero— which are among the most popular sports utility vehicles on Indian roads—are examples. Launched in 2000 and 2002 respectively, the Bolero and Scorpio have had regular updates throughout their history.

The Bolero sells over 9,000-plus units a month while the Scorpio clocks a monthly 6,000 units. Nayar attributes the continuing success of the two brands partly to their frequent facelifts.

According to Maruti’s Pareek, the timing of a refresh is critical. “One can’t do it too early in the lifecycle of a model, neither can one wait till sales starts falling as it comes close to the maturity curve,” he said.

On average, a car maker spends about Rs.150-200 crore on a minor facelift, which would include redesigned interiors, new headlamps, new colours and other cosmetic alterations. A major facelift, which improves vehicle performance while introducing cosmetic changes, costs Rs.400-500 crore, according executives at auto firms.

Despite the cost, the frequency of relaunches has increased by at least six months in the last decade, said Kumar Kandaswami, senior director and country manufacturing industry leader at Deloitte Touché Tohmatsu India Pvt. Ltd. On average, there’s a refresh every three years, a trend, he says might take a backseat once the car market picks up. Apart from facelifts, manufacturers also go for anniversary editions, corporate editions and special variants coinciding with a festival, to maintain buyers’ interest in a model.

Honda Cars India, which launched its first diesel sedan Amaze in April last year, unveiled an anniversary edition on completing a year of successful sales.

Some think ahead. “These (special editions) are becoming really important. Our team is already working on the anniversary edition of the model we plan to launch in 2019,” said Maruti’s Pareek.

Depending on the segment in which it is positioned, a limited edition model costs Rs.20,000-60,000 more than the base model.

Some car makers don’t see much merit in special editions.

“One launches a special edition to bring excitement to a product when it starts ageing in its life cycle. We do minor to major changes to extend the life cycle and follow it up with a completely new model,” said Rakesh Srivastava, senior vice-president, sales and marketing at Hyundai Motor India.

Car makers also target customers seeking differentiation with specific accessories. Maruti now offers about 4,000 different accessories, including spoilers, security systems, seat covers, decals, alloy wheels, reverse parking systems and central locking systems for its models. “It’s a good exercise to engage with customers,” says Pareek, adding that average spending on accessories by a Maruti buyer has nearly doubled from Rs.4,300 to Rs.8,000 in a year.

The demand for add-ons will grow as people spend more time on the road, said Jnaneswar Sen, senior vice-president, sales and marketing, Honda Cars India. “It’s also guided by a desire to express one’s personality and the need to protect the car,” he added.

Dealers aren’t complaining either: “It helps us improve the overall scorecard at the end of the month,” said Rahul Kale, general manager at a Maruti dealership in Mumbai. According to Kale, buyers often go for base versions and jazz them up with additional fixtures.

Related Companies: Hyundai Motor India Ltd.   Maruti Suzuki India Limited   

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