Midsize opportunity beckons the brave

India’s midsize saloon segment in the last financial year saw an interesting change in its sales equations. The leader of the pack, the Honda City, saw stiff competition from newcomer Volkswagen Vento.

Since its launch in September 2010, the Vento, VW’s first midsizer, has totted up sales of over 20,000 cars and frequently came close to the City’s monthly sales numbers. Finally in February and March 2011, the Vento raced ahead of the City. It’s not difficult to pinpoint the reason for this development. Unlike the City which is only available in petrol, the Vento has five versions combined for both petrol and diesel. In terms of price too, the Vento comes in at Rs 7.90 lakh (on-road Delhi) as against the City which is priced at over a lakh more.

What has put the skids on the City’s smooth run thus far (the current version was launched two years ago) is the hike in petrol prices. With nine price hikes over the last 12 months, the last at Rs 5 a litre, the cost of a litre of petrol in Mumbai is close to Rs 70 a litre. This has naturally increased running costs for those who would have liked a petrol car and who possibly then decided to opt for a diesel offering from other rivals in order to keep their running costs in check. For other OEMs, this has created a tantalising opportunity. Sensing an opportunity to grab a share of the midsize pie, and given the impetus of a petrol hike (with more hikes likely to come in the future), Maruti Suzuki launched a diesel version of its SX4 saloon in February 2011. Sales of this car have since gone up to over 2,000 on a monthly average from a monthly figure of 1300 in 2009-10. In April 2011, the City sold just around 1,500 units and the Vento, 2,866 units. The SX4 sold just over 2,000 units.

These developments herald interesting times for India’s midsized segment. Doing battle in this segment, apart from the City and Vento are Ford India’s Fiesta, Hyundai Verna and the Fiat Linea. Most recently, two new models have appeared on the horizon to make their mark in this segment. Ford India has unveiled a new version of the Fiesta that comes with a slew of features that includes voice control technology with Bluetooth, pull drive compensation, a suspension feature that reduced understeer, and rear parking sensors. Clearly, while Ford India has not announced prices, it’s banking on technology to pull more buyers into showrooms. Built on the B2E segment which it shares with Mazda 2, this platform is one that has won much acclaim for its light yet stiff construction as a result of the use of higher-tensile steel and boron in the body. The new Fiesta will have both petrol and diesel options. This saloon comes with more modern and upmarket looks but will the price be a killer?

Then there’s the new Hyundai Verna which was launched last month in 10 versions. Hyundai has pulled out all stops to ensure the Verna will be more than a match for the Vento. At a price of Rs 9 lakh (on-road Delhi) for the 1.4 CRDi diesel, it’s about the same price as the Vento in that segment but comes with a longer wheelbase and a slew of features that includes rear parking sensors, climate control and Bluetooth connectivity, to mention a few. Above all, its classy styling sets it apart from its competitors. Unlike the B-segment, which is India’s most competitive and where the Maruti Alto rules the roost with estimated sales of 25,000 units month, it’s only now that the midsized segment is beginning to see a lot of action.

It’s a sector that has caught the fancy of Peugeot that has already said it will target this segment with a saloon currently being developed at its Spanish facility. It may well be worth the while of Proton of Malaysia which is also looking at an India foray and into this segment. Proton’s Group managing director, Syed Zainal Abidin, said the company has tested its cars in India; its range, he reiterates, is suitable for India. What does it, therefore take to achieve success in this segment? Judging by what the existing players have done with their upcoming models, the accent is clearly on technology which translates into a variety of tech features. Hyundai, for one, hopes its CRDi engine combined with the features mentioned above and its well-known service will deliver the numbers. The fact that the company has received 12,000 bookings for the new Verna would certainly warm the cockles of Hyundai’s heart.

As far as the Fiesta goes, Ford India which has tasted sweet success with the Figo will hope that this will rub off on the Fiesta which sold close to 14,000 units in the last financial year. That number is not enough for Ford now. Having badged the existing Fiesta as the Fiesta Classic, Ford’s strategy is to price it lower than the new Fiesta and create a distinction of sorts in the model line-up. Maruti’s SX4 diesel uses the Fiat Multi-jet 1.3-litre engine and, thanks to its light weight, is expected to offer more fuel economy and improved performance. The Vento’s diesel variant will be dearer by 2.2 percent from July 1 and VW has said it will offer sops to customers for some select variants of the Vento petrol. Volkswagen continues to back its products with its high-decibel advertising and having just partnered with the IPL season 4 will look to further its reach for next year’s IPL too.

Finally, what about Honda? The company has gone on record to say that it will look at a diesel offering but that will take at least a couple of years before a variant can be launched here. But the Honda brand is big and the City has its pluses which include a powerful engine and great space. For diehard aficionados of the brand, it will always be a Honda.