This could be the year when the proverbial cookie in the domestic car industry crumbled. Over the last three months, India's largest selling car for well over a decade, Maruti Alto, has been outsold by stable-mate Dzire. In the diminutive mini car's long reign at the top, this has happened for the first time ever.
As a budget-oriented value for money car, Alto is the car that any traditional market analyst would say is the car for Indians. It does its job of commuting well, gives a good bang for every penny of fuel and is one of the least expensive cars to maintain on the road. The Dzire cannot even be considered as a remote competitor. At a starting price of Rs 5.5 lakh, it costs more than double of the Alto. Yet, its bigger dimensions, better driveability, and more importantly more features have made it a bestseller. It also shows the gradual premiumisation of the market where bigger and not necessarily cheaper cars are more in demand than basic entry-level models. In the last six months, Dzire's tally of 1.22 lakh units is only 7,000 less than Alto's.
"There has been an overall premiumisation of the market in the last few years. Customers prefer more feature loaded vehicles and do not mind paying more for it," says R S Kalsi, executive officer-sales and marketing, Maruti Suzuki India Ltd. "Affordability has also been helped by increased and better financing by the banks. Today, a customer does not look at the absolute amount that he would have to pay to buy a more premium car like a Swift or a Dzire over an Alto but in terms of the extra amount he needs to pay via equated monthly installments (EMIs). Today, we see more first time car buyers opt for premium (B2) hatchbacks and compact sedans than in the past where they would predominantly be upgrading from a M800, Alto or Wagon R."
It is not a very recent phenomenon either nor is it restricted to only Maruti. The first time Alto lost its best-seller position in a month was back in April 2012 when Swift was ahead. While that proved to be an exception, over the next few years Swift and Dzire have outpaced Alto off and on. Also, Alto is clearly way off its peak sales of 3.11 lakh units achieved in 2010-11. Its tally of 2.41 lakh units in 2016-17 was the lowest since 2009-10.
It is a trend that is visible in other companies as well. Hyundai's Grand i10 and premium hatchback i20 outsell its entry-level offering Eon by a few multiples. Honda's Dzire rivaling Amaze is head and shoulders above the Brio. Tata's Nano, famed as the world's most affordable car, is no patch on the sales of its new more expensive hatchback Tiago.
"The Indian consumer has evolved and he is no longer content with just a bare-bones car," says Rakesh Srivastava, senior vice president--sales and marketing, Hyundai Motor India Ltd. "The consumer is more aspirational and wants a stylish trendy vehicle that is feature loaded and yet value for money at the same time."
Should the Dzire continue to outsell Alto and end its thirteen-year reign at the top this year, would it mean the end of the road for entry-level mini cars in India?
"The entry-level story is still intact. What has changed is the way consumers begin their car ownership journey," Kalsi says. "Part of the answer is in the growth of the pre owned car segment. At our own True Value division, we sell around 300,000 pre-owned cars every year. There, a lot of two-wheeler owners buy a used Alto, use it for a few years and then when they become more affluent, they come back to buy a new Dzire. As a customer he is still a first-time new car buyer but is also an Alto owner."
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