Hatchback sales in May show the future – big shift among buyers to diesel cars

The sale of hatchbacks in the country continues to slow down, clearly the result of rising petrol prices and loan interest rates. After a steep decline of 19 percent in April, sales of hatchbacks further dipped by another 3 percent in May.

However, there is a bigger shift underlying this trend. Buyers are opting for diesel cars in a big way. Or, what the analysis of hatchback sales since January this year shows, models which are petrol-only are losing traction in the market.

A CarToq analysis of models that are petrol-only versus those with petrol and diesel options reveals a major change in the hatchback sales in the past few months. Maruti Suzuki and Ford later confirmed this trend. Read here.

The heavyweights in the petrol-only hatchbacks – those with sales above 5,000 units a month – include the Alto, Wagon R, i10, Santro and the Nano. They account for more than 50 percent of hatchback sales in the country. The combined sales of these cars have fallen by 17.5% since January this year.

And that trend is evident in sales figures for May as well. While the total hatchback sales dropped by 2.7 percent in May over April, the drop in sales of petrol-only hatchback heavyweights (Alto, Wagon R, i10, Santro and Nano) was almost three times that figure, at 7.9 per cent.

The price-sensitive hatchback market, which is the biggest segment of the auto industry, seems to have made up its mind in favour of diesel cars. Or, as the CarToq analysis shows, this is the beginning of big, long-term shift in the market.

Let’s take at the winner’s list for May to understand signs of this underlying shift.

Swift surges to number 2 spot

Swift sales shot up by 20% in May over April sales, and it overtook the Wagon R to occupy the number 2 spot in hatchback sales. This is the first time that the Swift has outsold the Wagon R.

One of the reasons for this surge is that Swift has one of the best value-for-money offerings in the diesel hatchback segment. Also read: Swift diesel comparative analysis

What makes this development especially significant is the imminent launch of the new 2011 Maruti Swift in July. Typically, buyers are expected to defer purchase decisions on a model that is soon to see a new launch.

So Swift sales should have dropped somewhat as potential buyers defer their decisions for the new product. But the existing proposition seems to be strong enough for the Swift to have overtaken the Wagon R in sales last month.

CarToq checked with Maruti if there was a big push to clear the inventory for the existing Swift models. There are no discount schemes on offer – in fact there is still a waiting period on some variants.

There are no break-up figures available for Swift diesel and petrol sales separately, but it is reasonable to presume that the diesel variants are a big factor for this strong showing. And this is strengthened by the fact that the other big gainer among hatchbacks in May also offers both diesel and petrol options.

Tata’s Indica range (Indica eV2 and Vista) has seen a 29 percent increase in sales in May, thanks mainly to an aggressive campaign by Tata, claiming the Indica eV2 to be India’s most fuel-efficient hatchback giving more than 25 kilometres to a litre of diesel. Indica sold 5,497 units in May, compared to 4,250 units in April.

To pursue this line of analysis further, we also looked at the list of big losers in May.

Nano loses steam, i10 dipping

Among the big losers in May was the Tata Nano, which slumped in sales to just 6,515 cars, from over 10,000 the previous month. That’s a whopping 35% drop in sales in May.

The Nano had a sales surge in March and April, thanks to an aggressive marketing campaign from Tata and the maintenance scheme with the car. But it seems that this isn’t enough of a proposition given its petrol-only proposition.

And that’s evident from the performance of the top-selling hatchback, the Alto. The petrol-only Alto barely managed to stay at previous month’s sales levels, and Maruti’s strongest petrol-only hatchback competitor dropped volumes in May. The Hyundai i10 has dropped in sales every month since the beginning of the year. In May too, the sales dropped by 7% over the April sales.

We further looked at the sales of hatchbacks that sell less than 5,000 units a month. Again, the petrol-only models are seeing a continuous drop in volumes right from January. This includes the Chevrolet Spark, Maruti Estillo, Maruti A-Star and the Chevrolet Beat.

Yes, these are early indicators of what the above analysis shows about petrol-only models losing traction among buyers. Over the next few months, CarToq would be closely tracking the sales trends in the industry, and bring you new insights about the changing buyer dynamics for diesel and petrol options.

Data source: Team-BHP, Company Releases