Monday, January 30, 2023
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Suzuki Kizashi, Honda Civic, Premier Rio—carmakers know when to pull the plug on bombs

India's automobile industry is full of failures, in the case of both big and small carmakers. The good thing is they learn from each other.

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While trundling along the shore of Pawna Lake, one of the many reservoirs that serves the city of Pune, I noticed an oddity ahead of me. A Premier Rio. It was so odd and so rare that I took a photograph and posted it on social media. And while I’m not sure many of you remember it, my followers on social media, many of whom have a bent of mind similar to mine, cottoned on to it.

The Rio, for those of you who don’t remember, was a car produced by Premier Automobiles Limited (PAL), makers of the Premier Padmini, the ubiquitous small car based on an old Fiat, which, alongside the Hindustan Ambassador, was a signature of pre-liberalisation India and until not that long ago, the standard taxi in Mumbai.

The Rio, which was based on the first generation Daihatsu Terios, was produced between 2012-2015 in India. While the market might have been shifting to small sports utility vehicles (SUVs), the Rio was, for lack of a nicer term, a commercial flop.

And it got me wondering, India is the world’s third-largest market for cars behind China and the United States. In 2018, when sales peaked before the Covid-19 pandemic, an estimated 3.2 million passenger vehicles were sold in India, although 2022 is on pace to break that record. Yet, despite having such a large market, the Premier Rio is not alone in being a market failure. And here is the funny thing: a commercial failure does not necessarily mean that the vehicle in question did not sell or was not well-received in the market, at least initially. It also does not mean that the failed car has to come only from a small carmaker; several large carmakers have produced bombs as well.

Sometimes cars are just in the wrong segment. Take the Honda Civic and CR-V for example. When the carmaker pulled these two models from the market, it was primarily due to the fact that the vehicles were orphans, in a manner of speaking. The Civic operated in the executive sedan segment, one where growth has been stagnant over the years, as buyers shifted preferences towards SUVs. The segment itself is so morose that even Hyundai is unsure of bringing their new Elantra later this year (they should, it is a stunning vehicle) and even Toyota called it quits with the Corolla Altis, which was the segment leader. Currently, the Skoda Octavia has the segment to itself and that sells just a few hundred units every month. 

The failure of the new CR-V, however, was a tad more fascinating. It was an SUV, after all, a segment that is booming. So why would Honda India withdraw the fifth-generation after just a couple of years? After all, the CR-V was a popular brand, much like the Civic. One reason was that Honda discontinued diesel engine production after the new Bharat Stage 6 emission norms came to pass. And while buyers in the National Capital Region (NCR) might have a diesel dilemma, that isn’t the case in the rest of India. On vehicles like the Hyundai Creta or Kia Seltos, diesels account for over half of sales even today. Without a diesel and sporting a thirsty (albeit fun) petrol motor, the car was just not competitive.

Also read: Remember Skoda’s Laura? Car names can go horribly wrong and no one wants to be bold anymore

Larger carmakers are on same boat

But it isn’t as if the larger carmakers haven’t had failures in the past. Although, a failure for Hyundai and Maruti-Suzuki could be a bestseller for another manufacturer. Take the case of Maruti-Suzuki Ritz. When the car was withdrawn from production, Maruti officials claimed that it wasn’t meeting the numbers it needed to sell. It was still selling between 4,000-5,000 units every month. Citroen India’s target sales for the new C3 hatchback is below that. Similarly, the Hyundai Eon just sold a couple of thousand units every month, at a time when the Korean carmaker couldn’t make enough Cretas.

It makes more sense for a manufacturer to withdraw a less popular model and concentrate on one that consistently sells and makes money. Keeping a car in production costs money, the effort to maintain the stamping dies (the heavy steel plates that stamp out the shaped panels), to maintain an inventory of parts and also the assurances given to the component manufacturers of certain volumes.

Small production runs, even for expensive cars that are often assembled from kits, make little sense for mass carmakers — the Suzuki Kizashi, for example, won rave reviews for its excellent engine and handling, yet stretched Maruti’s limits to be able to maintain a separate service network for this car. However, one of the more fascinating lessons Maruti-Suzuki learnt from the debacle of the Kizashi was the need to establish a more high-market sales network for premium vehicles. This is what gave birth to the Nexa. It is a strategy that others, such as Hyundai are learning from as well. Hyundai’s new Tucson SUV and possibly even the IONIQ 5 electric vehicle will be sold through a limited number of dealerships which may or may not get different branding.

But it has always been a problem for mass-market brands to sell premium vehicles. Take the Mahindra Alturas G4, the second generation of the Ssangyong Rexton. Brilliant vehicle, more plush than the Ford Endeavour and Toyota Fortuner it competed against, but the utilitarian nature of the Mahindra brand might have persisted with buyers who (at the time) felt uneasy to plonk over Rs 30 lakh on a Mahindra. Incidentally, the same buyers will likely spend almost Rs 30 lakh on a Mahindra Scorpio-N, the top-end 4×4 diesel automatic variant will cost that much on the road. The other problem being that at those prices, mass-market brands are edging up against luxury marques like Audi, BMW and Mercedes-Benz. And while a Rs 40-lakh Hyundai SUV today comes with all the features and more than a similarly priced BMW X1, the latter also being much smaller, has ‘badge value’ after all.

These stories, and there are many more that have occurred and others still to occur, are all essential parts of Indian automotive history. We would be poorer without the tales of failure to offset the successes. Hyundai needs to have an Eon against a Creta. Maruti a Ritz against the Dzire. This is not a comprehensive list, but I will explore more stories in future columns.

@kushanmitra is an automotive journalist based in New Delhi. Views are personal.

(Edited by Prashant)

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