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Mar 17, 2017 12:38 PM IST | Source: Moneycontrol.com

Goodbye Tata Nano, Nissan Micra? Some popular cars may face axe as cos plan rejig

Every car and sports utility vehicle making company in India is pruning their model-line, cutting excess flab, freeing up capacity and getting rid of slow moving products.

 
 
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With Indian automotive regulations set for dramatic changes later in the year as many as a dozen car models have already faced the axe or are in the process of getting discontinued.

Every car and sports utility vehicle manufacturer in India is pruning their model-line, cutting excess flab, freeing up capacity and getting rid of slow moving products.

This is done is the light of upcoming emission regulations (BS-IV this year and BS-VI in 2020) as well as the crucial crash test and safety norms (to be adopted this year and in 2019) besides other norms that will be enforced shortly.

Maruti Suzuki has already phased out the Ritz. Ritz were selling only 500 units a month out of Maruti's overall sales of 120,000.  Tata Motors could be bringing down the axe on the ageing Indica, its first block-buster mass-market model. Korean brand Hyundai has discontinued the popular i10 while Honda has stopped sales of the Mobilio. At the lower price end, Mobilio sold an average of 200 units per month and did sales of about only Rs 15 crore.

Other once-popular models like Chevrolet Tavera, Nissan Micra, Mahindra Xylo as well as the Tata Nano, India’s most affordable car, face a bleak future and will most likely get canned. The 12 models are a part of a batch of at least 20 models that have either been axed or in the process of getting phased out since the past 18 months.

These cars constitute less than 3 percent of the domestic volumes of these carmakers.

Investing in upgradation of engines to meet the new emission norms as well as upgradation of vehicle body structure to meet the crash test regulations entails significant investments which companies are reluctant to make.

Besides, companies are keen to ‘clean up’ their model portfolio, get rid of non-performing models which were moving mainly on the basis of steep discounts. Though the number of old generation models that will be upgraded are small only those models will be upgraded which are generating healthy sales numbers.

For instance, the country’s largest carmaker Maruti will launch the upgraded, next generation Swift next year succeeded by the next generation Alto in 2019. Mahindra & Mahindra, the country’s largest SUV maker, too will launch an all-new multi-purpose vehicle which will replace the multi-seater Xylo. Xylo did sales of 100 per month and at Rs 8 lakh a piece, it brought in a paltry Rs 8 crore.

Struggling Mumbai-based company Tata Motors will make the biggest model reshuffle yet in its decades-long history. Models like the Manza, Vista, Aria, Movus, Indigo, Nano, Indica and Venture have either already stopped production or are most likely in the process of getting phased out.

The company is busy refilling product gaps with new generation models like Tiago, Tigor, Nexon, Hexa and Racemo. More new products will make their debut till 2020 with at least two new products each year.

As per a notification from the Ministry of Road Transport and Highways, all cars to be launched after October this year will have to meet the full frontal, offset frontal and side impact norms, which are on par with the European standards.

Existing models have been given a further two years (October 2019) to upgrade to these standards. The new regulations will require cars to be crash-tested at the speed of 56 km/hr, have features like anti-lock braking system, electronic stability control, seat belt reminder.

C V Raman, Executive Director (engineering), Maruti Suzuki India said, “About 75-80 percent models will meet the regulations at least 12 months in advance. There are multiple tests that will be undertaken simultaneously on our fleet so it is better to understand that all our models will be simultaneously aligned to new norms. Our challenge is to ensure the fleet meets the target ahead of regulations. Our Rohtak facility helps us fast-track it. We would not like to share model-wise timelines”.

New launches like Baleno, Brezza and Ignis have allowed Maruti Suzuki to shift focus from mass market models which are getting crowded thanks to Renault, Datsun and Tata Motors.

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