The Indian car market continues to grow & attract new automakers, but it remains dominated by a single player

The Indian car market continues to grow and attract new automakers – with Kia and MG being the latest entrants – but it remains largely dominated by a single player. Despite an attempted onslaught by pretty much every global carmaker on the planet, Maruti-Suzuki still rules half the market – which is staggering when you consider that India is now the fifth largest car market in the world. 

 Hyundai is the only other manufacturer to have a market share of any significance – which is to say in double digits. Mahindra (7.5%), Tata (6%), Honda (5.5%), Toyota (4%) and Renault (3.5%) make up small portions of the pie, while VW – the erstwhile largest automaker in the world, until the Renault-Nissan Alliance added Mitsubishi to its fold recently – has just a measly 1.5% share of the market.

The question is, then, what can the likes of Kia and MG really hope to achieve? Well, if they come in looking to compete on cost at the expense of quality – in the hope for volumes – they’re likely to befall a familiar fate. But it’s not just cost cutting, or compromising on quality, because VW has the highest product quality in many of the segments in which it competes. It, on the other hand, has been handicapped by an inability to get a handle on a rouge dealer network that makes the aftersales experience a nightmare for its customers.

Kia and MG are investing thousands of crores in the country – 7,000 and 2,000 respectively (with the promise of another 3,000 crores from MG if all goes according to plan) – so they’ll undoubtedly be keen to see returns sooner rather than later. But they first need to work on the getting all the pieces of the puzzle right – quality, styling, positioning, dealer network, aftersales experience, etc. It would behove them to take a long-term view of their investment rather than expect quick returns. After all, there are no second chances in the Indian market. And, seeing that this market’s importance will only continue to grow in future, getting the fundamentals right is crucial for any new entrant. 

MG has the benefit of a great deal of India-market experience in its top management, not to mention the deep pockets of its Chinese parent, SAIC, while Kia can learn much from the success of its parent brand, Hyundai, in India. 

The most important thing that both new entrants can do is recognise that the aspirations of the Indian customer are sky high. As an automaker, you discount that at your own risk…