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-   -   Sales of entry-level cars fall by 75% in India | Sales average of merely 12,000 units each month (https://www.team-bhp.com/forum/indian-car-scene/272068-sales-entry-level-cars-fall-75-india-sales-average-merely-12-000-units-each-month.html)

That's very strange.

HT Mint just reported this today HT Mint link

This article is talking about entry level car segment only (Alto, Tiago, Kwid, Santro etc). This segment has become irrelevant. Cars like Baleno, Nexon are top sellers now.

https://www.team-bhp.com/forum/india...s-anaysis.html

Exactly, the cars below ₹5 lakh are on the ventilator and it's only a matter of time before the life line is removed. Only 3 cars are there, Alto, S-presso and Kwid. With next generation all the 3 will be axed in all possibilities, and with EV era on the horizon, it's almost impossible to have a car costing <5 lakh going forward.

The only really " tiny" car is the Alto. The Kwid, Tiago are a shade over 3.7m in length and actually longer than the Wagon R and the Ignis.

You are right. Tiago is a segment or two higher!

This is quite evident from the car sales trend. Taking the segment wise table from September 2023 Sales figures thread

We can see a clear and huge drop in the A segment car. The numbers of the current month are 1/3 of the number one year back and it is not a one off drop. It is consistent drop for last 1 year.

Sales in Sep-22 - 32k vs Sales in Sep-23 11k

Couple of thoughts on this:

- The numbers will be actually worse than this as I've heard about budget car inventory pile-up at dealerships. SIAM numbers are factory dispatches, not actual retail sales.

- Last month was the best month in history for the Indian car industry, with a whopping 3.64 lakh sales - related post. If in a record month, a car like the Alto moves just 7800 pieces, it's telling.

- A single crossover like the Creta outsells the entire budget car segment. That's in terms of sales units. Bring in gross turnover, and the Creta alone accounts for 4X the gross from budget hatchbacks. And we're not even bringing in other best sellers like the Brezza, Scorpio & Scorpio-N, Grand Vitara, Seltos etc.

- When times are tough, the rich get richer and the poor...poorer.



- You can see the pressures of the lower income level group via 2-wheeler sales too. YOY growth is almost nothing and the industry has seen many dips in recent quarters.

I believe most of the increase in car sales is from people upgrading their small car or buying a second car. Is there analysis if number of families with a car is on a decline?

My own case - the entry level cars are expensive and used cars though appearing costly are much better value.

Before 2 years, I had a budget of 5 lakhs for my first car (First car owner in the family) - none of the entry level cars made sense and even a new Alto was 6 lakhs+.

While the used Ritz ZXi, which I picked, had all the top end features like alloys, adjustable steering/seat, airbags, fog lamps, rear wiper etc and is also significantly more powerful and spacious (except boot). Also any small first car will be changed within 3-5 years in most cases, So, It simply made no sense buying an alto/celerio/kwid etc. as the used market is pretty good these days and buyback options are also available.

I have driven close to 25000 kms now, zero issues except regular service. I also know a lot of first time car owners going the used route and changing the car in 2-3 years.

One more reason for fall in entry level cars could be rapid growth in used car sales, especially the organized market. The pre-sales and delivery experience, convenience/trust factor and availability of finance make it much more attractive proposition.



If we look at financials of Bajaj/TVS/Royal Enfield, there is a steady uptick in revenues though. This means the slack in entry level bike sales is being covered by rising sales in more premium segments.

However, Hero Motocorp revenues are stagnant, because of their dependence on Splendor model.

If there is inventory pile of entry level cars, should we expect good discount on them after 1-2 months? If buyers are not interested in buying these cars and dealers are not able to sell these in the upcoming festive season, does this mean better discounts? I ask this because I was planning to buy Maruti Celerio AGS as a second car for my family i.e. mainly for city driving. The dealer mentioned that Celerio is readily available and they are not getting many inquiries for this car. The top end Celerio AGS is touching almost 8.2 lakhs without any discounts (which seemed expensive to me). What kind of price should I be asking for if I have made up my mind for buying this car?

The biggest competitor for Alto nowadays is not Tata or Hyundai, it is Spinny. This was the situation when Nano had come to the market when its biggest competitor was none other than a used Alto.

This trend will continue growing as the automotive market keeps maturing and incomes keep growing as we march towards becoming a $5 Trillion economy.

Coming to the entry level 2-wheeler commuter segment, that segment has lost its USP of low running costs. The 100cc commuter bike customer was willing to live with wheezy performance because it ran 80km to the litre. But 80km/litre today is now Rs. 1.3/km.

With entry level EV scooters offering running costs that are less than 1/10 of this (i.e. practically negligible), 100/110cc bikes have lost their USP. EV 2-wheelers are still no match to the higher capacity competition in terms of practicality, performance and range but 100/110cc is where the bulk of the 2-wheeler volumes exists and that is under direct attack.

In my opinion the fall is due to the state of the economy together with the high cost of fuel. The lower middle class is hit the most while the upper middle class is smiling & the top 1% are laughing. The skewed economic policies are going to cause a big problem in the future.

Assuming that everything is going to happen as you envisage, I would suggest you to wait a little more to January. Even if they manage to clear the stock during the festival season, December is traditionally a dull month for dealers during the previous "normal" times. There should be another stockpile - of 2023 models - by the first week of January 2024. Walk in and bargain hard. Since MSIL has numerous dealers unlike most other marques, you won't be disappointed.