The trend has gone against the projection of these companies and analysts who had predicted a consistent robust rise of compact sedans
Once regarded as the shining beacon of the passenger car segment, compact sedans are losing their sheen as buyers flock more to lifestyle products such as compact sports utility vehicles (SUVs) and premium hatchbacks.
The rate of growth of mini sedans (length measuring less than four meters) for several players have slowed down dramatically during the last few months given the parallel emergence of mini SUVs. The slowdown of demand from the commercial segment (aggregators like Ola and Uber) has also impacted volumes.
The trend has gone against companies' and analysts' prediction of a consistent robust rise for compact sedans, thought of as better alternatives to compact hatchbacks.
From just three models (Maruti Dzire, Hyundai Xcent and Honda Amaze) three years ago the compact sedan segment today has seven models after the addition of Ford Aspire, Tata Tigor, Volkswagen Ameo and Tata Zest.
The Dzire remains the highest-selling in the segment with a share of 60 percent followed by the Amaze with a share of 15 percent.
But for others, the numbers tell a different story.
Bitter pill
For the world’s largest car maker Volkswagen, the experience has been bitter. Despite locally engineering the Ameo compact sedan, its sales have fallen by nearly a third this year. Volumes of Ford’s all-new Aspire have fallen by nearly 30 percent this year compared to last year same period. Volumes of the low key Tata Motors sedan Zest has fallen by 38 percent this year.
Hyundai’s heavily refreshed Xcent has failed to draw in crowds too. The sedan which is popular among cab aggregators saw flat sales growth this year. Tata’s second product in the segment Tigor has also seen a near flat growth this year in volumes.
Honda Amaze, which underwent a significant midlife upgrade this year has started to lose its sheen. From an average of 9,600 units a month its volume has dropped to 6,200 units a month. In November, its volumes fell to under 4,900 units.
Maruti Suzuki’s Dzire remains one of the only two models to post a double-digit growth in the segment in 2018 so far. Honda’s refreshed Amaze is the other model to post better growth than the industry primarily due to the model change and low base effect.
“Compact sedan owners now want upgrades and that segment is going to be the next casualty, it is on a decline already. With the exception of one player, there is hardly any sales from others. There is hardly any new innovation from the manufacturers,” said Mayank Pareek, President (passenger vehicle business unit), Tata Motors speaking to Moneycontrol.
With mini SUVs and premium hatchbacks priced nearly in the same price band as the compact sedans (Maruti Brezza base diesel Rs 7.68 lakh and Maruti Baleno base diesel at Rs 6.56 lakh, Honda Amaze base diesel Rs 6.90 lakh, ex-showroom, Mumbai) the latter is feeling the chill.
Volumes of mini SUVs (length measuring less than four meters) have surged to nearly 30,000 units a month (from 20,000 a month) while that of premium hatchbacks to 31,500 units a month (from 28,500 units) this year, as per data provided by the Society of Indian Automobile Manufacturers.
