A growing car avan

Car manufacturers are competing for market share in Kashmir as bank finances ensure that more and more households can own one. R S Gull  reports.

Car market in J&K was a modest sector before it witnessed tremendous growth between 2000-2004.
Car market in J&K was a modest sector before it witnessed tremendous growth between 2000-2004.

Easy availability and financing stirred an instant surge in entry level cars (A1 segment) for a few years up to 2004. Subsequent decline panicked the industry. And it took them some time to understand the personal car’s ‘mobility order’ – A1 owners were upgrading to A2 and those not owning a car were starting with a used one.

With the introduction of TATA Nano, car dealers expect a reversal in stagnation in the A1 segment. “It is unlikely to eat our share but it will definitely bridge the gap between the two-wheeler and Maruti 800,” said Irfan Ahmad of the Jamkash Vehicleads, the Maruti dealer that revolutionised car sales and service in J&K by swift disposals.

“Nano would be cheaper than an auto rickshaw and slightly costlier than a two-wheeler that remains useless for almost half of the year because of the weather conditions. So it would cater to that segment,” says Ahmad.

Besides, car dealers believe potential of rural and the sub-urban belts is yet to be fully tapped and this would lead to upsurge in the A1 segment.

Nano is yet to get requisite permission to run in J&K. But that does not stop TATA motors from accepting bookings. In Kashmir alone, by now, over 3000 application forms have been sold and the numbers would go up once bookings re-open later this year.

Car market in J&K was a modest sector before it witnessed tremendous growth between 2000-2004. Industry sources put the car market at Rs 600 crores and one of the fastest growing personal car markets in northern India belt. The pride of owning a car is over. Now it is the class that matters.

Highly reliable industry sources disclosed to Kashmir Life that a total of 17443 units were sold in 2008-09 which exhibits a growth of 4.25 percent over the 2007-08 sales of 16732 units. Of this A1 segment comprised (in 2008-09) 4055 units, A2 was of the order of 11592 units, A3 405 units as remaining were the other high-end segment cars.

Maruti Udyog Ltd continues to be the market leader but its overall sales have gone down by 1.77 percent. From a market share of above 80 percent in 2004-05 in J&K, it shrunk to 68.2 percent in 2007-08 and 64.29 percent in 2008-09.

This was despite the fact that it has added more showrooms and extended its post sale services network. Maruti continues to be the sole player in A1 segment but with people upgrading to A2 segment sales have shrunk. From over 70 percent, a few years back, the A1 share in the overall car sales across J&K has gone down to 28.66 percent in 2006-07, 27.51 percent in 2007-08 and 23.24 percent in the last fiscal. In fact, the growth has been negative at 10.23 percent last year.

From the Maruti stable, it is Wagon-R and Swift (A2 segment) that are exhibiting a positive growth and Dzire (A3) that witnessed a phenomenal growth in last one year. All other models are either stagnated or showing a negative trend.

A2 is the highly competitive segment given the volumes – of 17443 cars sold last fiscal, 11592 were from the A2 segment. There are lot many cars in this segment but market leader Maruti has Hyundai and TATA as its immediate rivals. In fact Hyundai is making a dent into the Maruti monopoly. Market sources suggest that while Maruti is much ahead of Hyundai in overall A2 sales in J&K, the latter is almost equal to Maruti in Kashmir.

Against 5988 A2 units that Maruti sold in 2007-08 in J&K, it jumped to 6039 last fiscal. But Hyundai sales surged from 2985 in A2 segment to 4585 in one year. Its Getz is down but the Hyundai base models (i10, i20) and Santro are really doing well. Negative growth is clear in both the GM cars (Spark and Aveo Uv A), Ford (Fusion) and even TATA (Indica) that is down by almost half in last one year.

Barring GMs Aveo, HMs Ambassador and Mahindra’s Logan, all other cars in the A3 are showing small growth. Honda City witnessed a phenomenal growth from seven to 134. Maruti’s Dzire is the leader as TATA’s Indigo plays second fiddle.

J&K has a very small A4 segment market as against 96 units sold in the state in 2007-08 only 94 were sold in last financial year. As for A5, it is almost absent as in last two years only one car – a Toyota Camry was sold in the state. This, however, does not stop the rich from importing BMWs that are registered in Delhi or Punjab.

This excludes the Sports Utility Vehicles (SUV) sector that from TATA Sumo to Scorpio has many commercial models and are doing a whopping business that industry estimates is not less than Rs. 150 crores a year.

But the larger issue that is continuously being ignored is the failure of certain car manufacturers in after sale service to the customers. “I am one of the few hundred people who own Toyota Qualis. But we are suffering for all these years because the company has not kept either the services or the spares available here”, said Showkat Ahmad who runs a taxi from the Polo View stand. “For every single problem we have to drive to Jammu, book hotel for a few days and be in the queue to get it rectified”. He said the drivers owning Qualis might have spent almost another car on the upkeep of this vehicle simply because we do not have a facility in Srinagar.

Interestingly, ambassador continues to be the main choice of the state government. In a few cases some ministers have switched towards other trendy brands. At the same time, however, the security forces patronage has severely impacted the Maruti’s SUV Gypsy’s prospects in the private sector. This has led to the growth in other brands like Scorpio.

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