Seltos' and Hector's Indian journey

Unfolding the factors behind KIA and MG's top gear entry in India

16th Sep 2019
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India recently witnessed a pair of new entrants debuting Indian automobile world. South Korean automaker KIA launched Seltos and China-owned British car maker MG(Morris Garages) launched Hector, in the month of Jul-Aug this year. Both these care are placed under the mid-sized SUV segment. Feature packed, catchy design, state of Art technologies, anything to leave a car enthusiasts in awe.

 

Both these cars are offering several variant and aggressively priced giving a tough competition to car makers of its likes in this segment. There are a plenty of websites already written tons of articles on what the two new entrants has to offer and every nook and corner about the features and what not. So I will skip that part and come straight to the purpose of this blog.

 

Many of you must be wondering, some new car company or model enters Indian markets with a fancy model every time, what's different with these two. How is it going to make its presence felt in the already overflowing automobile market.

 

It's basically the matter of time at which they are launched when the Indian automobile sector is going through a rough phase. Yet KIA and MG managed to clinch an attractive Sales figures in the first month of their launch. Let's dive a little deeper to find that mantra which helped KIA and MG's successful feet amidst Indian automobile sector's slumping phase.

 

As per the latest figures released by SIAM(Society of Indian Automobile Manufacturers), there had been a massive decline in the overall automobile sales this year, some even call it worse since last decade.

Auto Percent Decline 2019 YOY

Major car makers like Maruti Suzuki, Hyundai, Mahindra and all others are going through this slippery slope. Industry experts have started deriving theories behind the slowdown. Multiple factors have come to light which results to continuing descend of automobile sectors. Few findings from various auto experts indicates below factors.

 

Stringent Lending rules by banks due to economic slow down

Current Economic slowdown made banks cautious. Some banks have made lending stringent like only specific to credit scores leading to reduced number of eligible buyers.

Stricter BS6 norms by 2020

Indian Government's plan to make Bharat VI emission standard mandatory by April 2020 had left consumers in dilemma. Dealers rushing to clear the BS4 stocks mostly including Diesel vehicles.

Rise of ride share service

With the advent of app based cab booking like Uber, Ola and ride sharing like QuickRide it's now easier to get rides. A majority of consumers consisting Millennial who prefer ride sharing/ car pooling model over ownership of a vehicle.

Govt. push for EV by 2030

Though lack of visibility at present towards Infrastructure and plan for EV ecosystem, it has a passive impact where buyers are in hope of upcoming govt. plans

Overcrowding, traffic snarls

Ever since auto purchase had been made affordable through easy Auto loans more and more number of vehicles are getting added on roads daily leading to overcrowding of roads and traffic jams. Another reason people are afraid to add to the misery.

Growing interest for pre-owned cars

Amidst slowdown of new car sales, pre-owned car sales had been growing. As per platforms like OLX and Quickr young generation are mostly keen in buying pre-owned cars to suit their life style.

Miscellaneous factors-

  • Inconsistent road tax causing car makers to increase vehicle price
  • Increased GST on auto parts

 

Despite above market situation KIA Seltos and MG Hector received a whopping response from potential buyers. The footfall in their newly opened showrooms last month led to an overwhelming bookings as well. KIA claimed to receive 32,000 booking requests where as MG claimed 28000 booking requests till first week of Aug 2019. Competing with the likes of Hyundai Creta, Mahindra XUV, Jeep Compass, Tata Harrier etc. their first month sales figures are quite impressive. 

Car sales figure-new

KIA Seltos reported sales of 6236 units in its debut month of Aug. Since MG Hector debuted in Jul a month earlier in Indian market its sales were 1508 and 2018 in Jul and Aug respectively.

 

KIA motors India facility is spread across in over 500 acres near Anantpur, Hyderabad in Southern India. As per the CEO, KIA motors so far they have invested  US$1 Billion in India facility. The plant has a production capacity of 3,00,000 units per annum. As per him, they are looking at about 3 years time to break even the investment cost.

On the other hand MG motors manufacturing plant based in Halol, Gujarat has a production capacity of 80,000 units per annum. MG India has so far invested US$320 million in its Gujarat based plant.

 

Differentiating factors

Both cars are feature packed and has a plenty to offer in terms of aesthetics, experience, technology and comfort. Nevertheless below factors could be deciders for potential buyers when it comes to making a choice- 

Feature list-new
  • BS Emission standard - The current debate over Indian govt. mandating BSVI compliance from next year, has clearly cautioned customers amidst which Seltos appears future ready with its BS VI engine attracting buyers.
  • Variants - With 16 variants and 12 colors options Seltos got second spot on variants after Creta having 17. Hector has 8 variants and 5 color options which is a decent option to choose from along with likes of Harrier and XUV.
  • Price Range - Starting from 10L Seltos has pretty aggressive price range in its class, a reason to attract many budget conscious buyers. Hector on a slightly higher range, has the USP of being the longest in size and wheel base.
  • Showrooms and Service Points - Despite of volumes of showroom, an important factor for consumers is after Sales Service. The more the customer touch points the less hassle in service. KIA knows it better. KIA having 192 service points with MG having 46 at present in the country. Another factors which drove in customers.
  • Warranty - MG Hector got the attention here with 5yrs/unlimited KMs followed by Seltos 3yrs/Unlimited Kms. 5yrs Unlimited Kms warranty is a big factor to consider which is the longest among the likes of existing players.

 

Summary

From the above figures both KIA Seltos and MG Hector looks promising in terms of features and performance. However as the trends suggests new entrants have always been eye catchers for a while. Consumers nowadays are more aware with access to knowledge, with 16 variants double as that of Hector, Seltos certainly gives buyers more options to choose from. With an attractive price range starting 10L on wards KIA Seltos is quite aggressively priced for a compact SUV segment. MG Hector launched with more than a 300 customization to suit Indian conditions is not any lesser serious about it's interest in Indian market. Those 3526 units of Hector on roads are decent head start for Morris Garages. In the long run, we will know their grip on Indian market based on the Sales and after Sales feedback from ground.


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